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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2005
 or
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-27938
 COLUMBIA BANCORP
  93-1193156Oregon
    
    (I.R.S. Employer(State of incorporation)
    
    Identification No.)
 
    o þ
 o þ
 þ o
 o
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
    Columbia Bancorp




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TABLE OF CONTENTS
 PAGEDISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    3PART IITEM 1
    
    DESCRIPTION OF BUSINESS
    
    
    3ITEM 1A
    
    RISK FACTORS
    
    
    14ITEM 1B
    
    UNRESOLVED STAFF COMMENTS
    
    
    15ITEM 2
    
    PROPERTIES
    
    
    16ITEM 3
    
    LEGAL PROCEEDINGS
    
    
    17ITEM 4
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    18PART IIITEM 5
    
    MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
    
    
    18ITEM 6
    
    SELECTED FINANCIAL DATA
    
    
    19ITEM 7
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    19ITEM 7A
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    44ITEM 8
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    45ITEM 9
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    79ITEM 9A
    
    CONTROLS AND PROCEDURES
    
    
    79ITEM 9B
    
    OTHER INFORMATION
    
    
    80ITEM 10
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    80PART IIIITEM 11
    
    EXECUTIVE COMPENSATION AND REPORT OF COMPENSATION COMMITTEE
    
    
    81ITEM 12
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
    
    
    81ITEM 13
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    81ITEM 14
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    81(Items 11 through 14 are incorporated by reference from Columbia Bancorps definitive
proxy statement for the Annual Meeting of Shareholders to be held on April 27, 2006)PART IVITEM 15
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
    
    
    81SIGNATURES
    
    
    84EXHIBIT 10.28EXHIBIT 13.1EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  Columbia Bancorp




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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 This report, particularly including but not limited to the section entitled Managements Discussion
and Analysis of Financial Condition and Results of Operations, contains a number of forward-looking
statements about our anticipated business, operations, financial performance and cash flows.
Statements in this report that relate to future plans, events and circumstances are provided to
describe Managements intentions and expectations based on currently available information, and
readers should not construe these statements as assurances or guarantees. As with any predictions,
these statements are inherently difficult to make with any degree of assurance, and actual results
may differ materially and adversely from Managements expectations described herein. Likewise,
Managements plans described in this report may not come to pass because unforeseen events may
force Management to deviate from its expressed intentions. Forward-looking statements often can be
identified by the use of predictive or prospective terms such as expect, anticipate, believe,
plan, intend, and words of similar construction or meaning. Some of the events or
circumstances that may cause our actual results to deviate from Managements expectations include
the impact of competition and local and regional economic factors upon our customer base, our
deposits and loan portfolio; economic and regulatory limits on our ability to grow our assets and
manage our business; customer acceptance of our products and services; interest rate fluctuations
that may adversely impact our revenues and expenses; and the impact of impairment charges upon our
intangible and other assets. We also face risks associated with the geographic concentration of
our customers, our ability to maintain or expand our market share or net interest margins, and
competitive and economic issues that impact our ability to implement our marketing and growth
strategies. Other factors that may adversely impact our performance are discussed in the section
entitled Risk Factors, as well as other disclosures we make from time to time in our other filings
with the Securities and Exchange Commission. Readers should be aware that these factors are not an
exhaustive list, and should not assume that these are the only factors that may cause our actual
results to differ from our expectations. Readers also should note that forward-looking statements
expressed in this report are made as of the date this report is filed and Management cannot
undertake to update those statements to reflect future events or circumstances.
 
 PART I
 
 ITEM 1.
    
    DESCRIPTION OF BUSINESS
 General
   Columbia Bancorp




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Columbia Bancorp




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Business Strategy
 U.S. Banker th U.S. Banker U.S. Bankers
 Operate Successfully in Small to Medium Sized Communities.
 Maintain High Asset Quality.
 Products and Services
 Consumer Distribution Channels
 Retail Bank Products and Services.
 CRB Mortgage Team Products and Services.
 Columbia Bancorp




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CRB Financial Services Team Products and Services.
 Technology-Based Products and Services
 Commercial Distribution Channels
   Commercial Loans
 Agricultural Loans
 Real Estate Loans
 Columbia Bancorp




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Government-Assisted Loan Programs.
 Services to Non-Profits and Public Entities.
 Cash Management Services.
 Deposit and Related Products.
 Investment Products.
 Columbia Bancorp




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Principal Markets of Operation
   Competition
    Columbia Bancorp




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SUPERVISION AND REGULATION
 General
  Gramm-Leach-Bliley Financial Services Modernization Act
   Holding Company Bank Ownership
 Holding Company Control of Nonbanks.
 Transactions with Affiliates.
 Columbia Bancorp




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Tying Arrangements.
 Federal and State Bank Regulation
 General.
 Community Reinvestment Act (CRA).
 Insider Credit Transactions.
 FDICIA.
 Interstate Banking and Branching
   Columbia Bancorp




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Deposit Insurance
   Dividends
  Capital Adequacy
   Columbia Bancorp




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Effects of Government Monetary Policy
  Columbia Bancorp




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Sarbanes-Oxley Act of 2002
  Changes in Banking Laws and Regulations
  Employees
 Oregon Business
 Directors and Executive Officers
  Website Access to Reports
  Columbia Bancorp




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ITEM 1A.
    
    RISK FACTORS
  Adequacy of Loan Loss Allowance.
 Growth Management
 Changes in Market Interest Rates.
 Liquidity
 Columbia Bancorp




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Geographic Concentration.
 Regulation.
  Competition.
 Credit Risk.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  Columbia Bancorp




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ITEM 2.
    
    PROPERTIES
  YearSquare
    
    Opened or
    
    OccupancyCity and County
    
    Address
    
    Feet
    
    Acquired
    
    StatusOregon BranchesThe Dalles (Main)Wasco County
    
    316 East Third Street
    
    
    11,441
    
    
    
    1977
    
    
    OwnedThe Dalles (Westside) (1)Wasco County
    
    520 Mt. Hood Street
    
    
    430
    
    
    
    1986
    
    
    LeasedThe Dalles (Cherry Heights) (2)Wasco County
    
    500 Cherry Heights Rd
    
    
    1,800
    
    
    
    2006
    
    
    OwnedHood River BranchHood River County
    
    2650 Cascade Avenue
    
    
    6,875
    
    
    
    1993
    
    
    OwnedMadras BranchJefferson County
    
    624 SW Fourth Street
    
    
    7,660
    
    
    
    1995
    
    
    OwnedRedmond BranchDeschutes County
    
    434 North Fifth Street
    
    
    5,900
    
    
    
    1995
    
    
    OwnedSouth Redmond BranchDeschutes County
    
    1502 SW Odem Medo Rd
    
    
    5,078
    
    
    
    2004
    
    
    LeasedBend BranchDeschutes County
    
    1701 NE Third Street
    
    
    8,306
    
    
    
    1996
    
    
    OwnedShevlin Center Branch(3)Deschutes County
    
    925 SW Emkay Drive
    
    
    15,000
    
    
    
    1999
    
    
    OwnedBend Limited Facility (4)Deschutes County
    
    1010 NE Purcell Blvd
    
    
    80
    
    
    
    2002
    
    
    OtherWall Street BranchDeschutes County
    
    1133 Wall Street
    
    
    12,421
    
    
    
    2004
    
    
    LeasedHermiston BranchUmatilla County
    
    1033 South Highway 395
    
    
    4,700
    
    
    
    1998
    
    
    OwnedPendleton BranchUmatilla County
    
    2101 SW Court Place
    
    
    4,700
    
    
    
    1999
    
    
    OwnedMcMinnville Branch(3)Yamhill County
    
    723 N Baker
    
    
    9,893
    
    
    
    1998
    
    
    OwnedMcMinnville Limited Facility (4)Yamhill County
    
    900 NW Hill Road
    
    
    60
    
    
    
    1998
    
    
    OtherMcMinnville Limited Facility (4)Yamhill County
    
    300 NW Hillside Pkwy
    
    
    60
    
    
    
    2001
    
    
    OtherCanby BranchClackamas County
    
    223 NE 2nd Street
    
    
    3,615
    
    
    
    2001
    
    
    Leased
 Columbia Bancorp




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YearSquare
    
    Opened or
    
    OccupancyCity and County
    
    Address
    
    Feet
    
    Acquired
    
    StatusNewberg BranchYamhill County
    
    901 N Brutscher St, Ste A
    
    
    3,900
    
    
    
    1999
    
    
    LeasedWashington BranchesWhite Salmon BranchKlickitat County
    
    390 NE Tohomish Street
    
    
    5,500
    
    
    
    1996
    
    
    OwnedGoldendale BranchKlickitat County
    
    202 West Main Street
    
    
    6,105
    
    
    
    1996
    
    
    OwnedMeadow Springs Branch (5)Benton County
    
    139 Gage
    
    
    10,000
    
    
    
    2006
    
    
    LeasedPasco Branch (6)Franklin County
    
    4725 Road 68
    
    
    3,700
    
    
    
    2006
    
    
    OwnedOther FacilitiesThe Dalles AdministrationWasco County, OR
    
    401 E Third St, Suite 200
    
    
    20,000
    
    
    
    2002
    
    
    Leased
 
 (1) Leased space in a Safeway supermarket.(2) Branch under construction at December 31, 2005. Expected to open during first
quarter of 2006.(3) Branch operations are located on the first floor. The second floor is available for
lease to other parties.(4) CRB has an agreement in place that does not require financial payment for these
limited-branch facilities.(5) Branch under construction at December 31, 2005. Opened January 2006.(6) Branch under construction at December 31, 2005. Expected to open during first or
second quarter of 2006. 
 ITEM 3.
    
    LEGAL PROCEEDINGS
  Columbia River Bank v. Cascadia Revolving Fund, Wasco, Oregon County, Circuit Court Case No.
CC04-217
  Columbia Bancorp




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Columbia River Bank v. Anthony Glavin, et al., USDC (OR) Case No. 04-CV-1034-MO
   
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
  Table 1
 2005
    
    2004Stock Trading Range (1)
    
    Cash Dividend
    
    Stock Trading Range (1)
    
    Cash DividendHigh
    
    Low
    
    Declared
    
    High
    
    Low
    
    DeclaredFirst Quarter
    
    $
    17.06
    
    
    $
    15.91
    
    
    $
    0.09
    
    
    $
    17.05
    
    
    $
    14.55
    
    
    $
    0.09Second Quarter
    
    
    18.02
    
    
    
    15.91
    
    
    
    0.09
    
    
    
    15.77
    
    
    
    12.32
    
    
    
    0.09Third Quarter
    
    
    19.68
    
    
    
    17.03
    
    
    
    0.09
    
    
    
    15.45
    
    
    
    12.55
    
    
    
    0.09Fourth Quarter
    
    
    22.08
    
    
    
    18.51
    
    
    
    0.09
    
    
    
    18.87
    
    
    
    14.95
    
    
    
    0.09
 
 (1)
    
    Adjusted to reflect the 10% stock dividend, effective December
29, 2005. Sales of Unregistered Securities
  Columbia Bancorp




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ITEM 6.
    
    SELECTED FINANCIAL DATA
  Table 2
 As of and For the Years Ended December 31,(dollars in thousands except dollars per share data)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Income Statement DataInterest income
    
    $
    53,589
    
    
    $
    42,708
    
    
    $
    38,230
    
    
    $
    37,616
    
    
    $
    35,078Interest expense
    
    
    11,302
    
    
    
    7,328
    
    
    
    6,831
    
    
    
    7,782
    
    
    
    11,583Net interest income
    
    
    42,287
    
    
    
    35,380
    
    
    
    31,399
    
    
    
    29,834
    
    
    
    23,495Loan loss provision
    
    
    3,115
    
    
    
    2,760
    
    
    
    2,575
    
    
    
    1,800
    
    
    
    1,450Net income
    
    
    13,670
    
    
    
    10,735
    
    
    
    9,834
    
    
    
    9,381
    
    
    
    7,374Balance Sheet DataInvestment securities
    
    $
    36,780
    
    
    $
    45,398
    
    
    $
    31,682
    
    
    $
    36,048
    
    
    $
    43,532Total loans, net
    
    
    677,686
    
    
    
    574,125
    
    
    
    464,350
    
    
    
    432,687
    
    
    
    380,283Total assets
    
    
    841,239
    
    
    
    715,373
    
    
    
    584,136
    
    
    
    544,326
    
    
    
    482,207Total deposits
    
    
    707,822
    
    
    
    606,944
    
    
    
    496,358
    
    
    
    458,624
    
    
    
    394,636Shareholders equity
    
    
    77,492
    
    
    
    65,877
    
    
    
    57,804
    
    
    
    50,190
    
    
    
    46,445Per Share DataEarnings per common shareBasic earnings per common share(1)
    
    $
    1.39
    
    
    $
    1.11
    
    
    $
    1.03
    
    
    $
    0.96
    
    
    $
    0.76Diluted earnings per common share(1)
    
    
    1.36
    
    
    
    1.08
    
    
    
    0.99
    
    
    
    0.93
    
    
    
    0.74Cash dividends declared per common share
(1)
    
    
    0.36
    
    
    
    0.36
    
    
    
    0.32
    
    
    
    0.28
    
    
    
    0.28Book value per common share(1)
    
    
    7.86
    
    
    
    6.78
    
    
    
    6.01
    
    
    
    5.27
    
    
    
    4.78Capital RatiosTier I capital ratio (2)
    
    
    9.70
    %
    
    
    9.80
    %
    
    
    10.46
    %
    
    
    9.71
    %
    
    
    9.36
    %Total risk-based capital ratio (3)
    
    
    10.95
    %
    
    
    11.05
    %
    
    
    11.71
    %
    
    
    10.96
    %
    
    
    10.61
    %Leverage ratio(4)
    
    
    9.77
    %
    
    
    8.74
    %
    
    
    9.19
    %
    
    
    8.57
    %
    
    
    8.61
    %Financial RatiosReturn on average assets
    
    
    1.77
    %
    
    
    1.64
    %
    
    
    1.71
    %
    
    
    1.80
    %
    
    
    1.64
    %Return on average equity
    
    
    19.01
    %
    
    
    17.50
    %
    
    
    18.25
    %
    
    
    18.80
    %
    
    
    16.76
    %
 
 (1)
    
    Prior periods have been adjusted to reflect 10% stock dividend effective May 1, 2003 and 10% stock dividend effective December 29, 2005.(2)
    
    Tier I capital divided by risk-weighted assets.(3)
    
    Total regulatory capital divided by risk-weighted assets.(4)
    
    Tier I capital divided by average total assets. 
 ITEM 7.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Columbia Bancorp




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Overview
  th
 
    
    During 2005, loan portfolio growth of 17.53% and continued rate increases on variable
rate loans, resulted in $9.33 million, or 22.63%, increase in loan interest income, which
was partially offset by a $3.97 million, or 54.22%, increase in interest expense.
    
    During 2005, as our deposit growth outpaced loan growth, our excess liquidity earned
$1.18 million in federal funds interest, included in other interest income, an increase of
$975,873, or 485.00%.
    
    Provision for loan losses increased $355,000 from 2004 to 2005 due to overall loan
portfolio growth and an increase in net charged-off loans$1.77 million for 2005 compared
to $1.19 million for 2004.
    
    Based upon the achievement of company financial and operational goals, incentive
compensation expense increased $1.61 million, or 117.77%, for 2005 compared to 2004.
    
    Salaries and benefits, excluding incentive compensation, increased $1.52 million for the
year ended December 31, 2005, compared to 2004. This follows the hiring of personnel to
staff our new branches, as well as the addition of several new administrative positions in
response to our growth.
  
    
    State of Oregon corporate kicker tax benefit of $98,250, contributed $0.01 per diluted
share, recognized during the fourth quarter
    
    State of Oregon corporate kicker tax benefit of $230,000 contributed $0.03 per diluted
share, recognized during the third quarter
    
    Gain from sale of the mortgage servicing asset of $560,588 contributed $0.04 per diluted
share, recognized during the second quarter
    
    Collection of $336,000 in non-accrual interest associated with 2004 contributed $0.02
per diluted share, recognized during the first quarter
 Columbia Bancorp




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Table 3
 2005
    
    2004
    
    2003
    
    2002
    
    2001Return on average assets
    
    
    1.77
    %
    
    
    1.64
    %
    
    
    1.71
    %
    
    
    1.80
    %
    
    
    1.64
    %Return on average equity
    
    
    19.01
    %
    
    
    17.50
    %
    
    
    18.25
    %
    
    
    18.80
    %
    
    
    16.76
    %Average equity to asset ratio
    
    
    9.32
    %
    
    
    9.35
    %
    
    
    9.39
    %
    
    
    9.57
    %
    
    
    9.77
    %Net interest margin, tax equivalent basis
    
    
    5.95
    %
    
    
    5.95
    %
    
    
    6.07
    %
    
    
    6.40
    %
    
    
    5.92
    %Efficiency ratio
    
    
    53.67
    %
    
    
    54.86
    %
    
    
    55.43
    %
    
    
    57.26
    %
    
    
    60.20
    %Cash dividend payout ratio
    
    
    24.12
    %
    
    
    29.54
    %
    
    
    28.66
    %
    
    
    27.50
    %
    
    
    34.85
    %
        Columbia Bancorp




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Critical accounting policies and estimates
     Columbia Bancorp




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Table 4
 (dollars in thousands except per share data)
    
    2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    13,670
    
    
    $
    10,735
    
    
    $
    9,834Deduct: Total stock-based employee
compensation expense determined
under fair value based methods for
all awards, net of related tax effects
    
    
    (508
    )
    
    
    (82
    )
    
    
    (177
    )$
    13,162
    
    
    $
    10,653
    
    
    $
    9,657Pro forma net incomeEarnings per share (1):Basic  as reported
    
    $
    1.39
    
    
    $
    1.11
    
    
    $
    1.03Basic  pro forma
    
    
    1.34
    
    
    
    1.10
    
    
    
    1.01Diluted  as reported
    
    
    1.36
    
    
    
    1.08
    
    
    
    0.99Diluted  pro forma
    
    
    1.31
    
    
    
    1.07
    
    
    
    0.97
 
 (1)
    
    Prior periods have been adjusted to reflect the 10% stock dividend, effective
December 29, 2005  Table 5
 2005
    
    2004
    
    2003Dividend yield
    
    1.82%
    
    1.80%
    
    2.14%Expected life (years)
    
    6 years
    
    6-8 years
    
    6 yearsExpected volatility
    
    40.84%
    
    43.28%
    
    43.71%Risk-free rate
    
    2.05 - 3.91%
    
    2.90 - 3.02%
    
    3.02%
   Columbia Bancorp




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Results of Operations
 Net Interest Income
   Average Balances and Average Rates Earned and Paid.
 Table 6
 Year Ended December 31, 2005
    
    
    Year Ended December 31, 2004
    
    

Year Ended December 31, 2003Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income or
    
    
    Yields or
    
    
    Average
    
    
    Income or
    
    
    Yields or
    
    
    Average
    
    
    Income or
    
    
    Yields or(dollars in thousands)
    
    Balance
    
    
    Expense
    
    
    Rates
    
    
    Balance
    
    
    Expense
    
    
    Rates
    
    
    Balance
    
    
    Expense
    
    
    RatesInterest-earning assets:Loans (1)
    
    $
    623,656
    
    
    $
    50,572
    
    
    
    8.11
    %
    
    $
    544,945
    
    
    $
    41,240
    
    
    
    7.57
    %
    
    $
    456,137
    
    
    $
    36,496
    
    
    
    8.00
    %Investment securitiesTaxable securities
    
    
    23,921
    
    
    
    746
    
    
    
    3.12
    
    
    
    16,846
    
    
    
    435
    
    
    
    2.58
    
    
    
    17,033
    
    
    
    514
    
    
    
    3.02Nontaxable securities (2)
    
    
    12,941
    
    
    
    905
    
    
    
    6.99
    
    
    
    13,296
    
    
    
    973
    
    
    
    7.32
    
    
    
    15,662
    
    
    
    1,150
    
    
    
    7.34Total investment securities
(2)
    
    
    36,862
    
    
    
    1,651
    
    
    
    4.48
    
    
    
    30,142
    
    
    
    1,408
    
    
    
    4.67
    
    
    
    32,695
    
    
    
    1,664
    
    
    
    5.09Interest-earning balances due
from banks
    
    
    17,699
    
    
    
    496
    
    
    
    2.80
    
    
    
    12,031
    
    
    
    215
    
    
    
    1.79
    
    
    
    13,444
    
    
    
    286
    
    
    
    2.13Federal funds sold
    
    
    37,615
    
    
    
    1,177
    
    
    
    3.13
    
    
    
    13,940
    
    
    
    201
    
    
    
    1.44
    
    
    
    21,663
    
    
    
    205
    
    
    
    0.95Total interest-earning
assets (3)
    
    
    715,832
    
    
    
    53,896
    
    
    
    7.53
    
    
    
    601,058
    
    
    
    43,064
    
    
    
    7.16
    
    
    
    523,939
    
    
    
    38,651
    
    
    
    7.37Nonearning assets
    
    
    55,820
    
    
    
    
    
    
    
    
    
    
    
    54,616
    
    
    
    
    
    
    
    
    
    
    
    49,995Total assets
    
    $
    771,652
    
    
    
    
    
    
    
    
    
    
    $
    655,674
    
    
    
    
    
    
    
    
    
    
    $
    573,934Interest bearing liabilities:Interest bearing checking and
savings accounts
    
    $
    287,504
    
    
    $
    4,051
    
    
    
    1.41
    %
    
    $
    230,826
    
    
    $
    1,476
    
    
    
    0.64
    %
    
    $
    219,682
    
    
    $
    1,597
    
    
    
    0.73
    %Time deposit & IRAs
    
    
    174,495
    
    
    
    5,893
    
    
    
    3.38
    
    
    
    157,854
    
    
    
    4,554
    
    
    
    2.89
    
    
    
    128,719
    
    
    
    4,023
    
    
    
    3.13Borrowed funds
    
    
    33,652
    
    
    
    1,358
    
    
    
    4.04
    
    
    
    38,093
    
    
    
    1,298
    
    
    
    3.41
    
    
    
    29,212
    
    
    
    1,211
    
    
    
    4.15Total interest bearing
liabilities
    
    
    495,651
    
    
    
    11,302
    
    
    
    2.28
    
    
    
    426,773
    
    
    
    7,328
    
    
    
    1.72
    
    
    
    377,613
    
    
    
    6,831
    
    
    
    1.81Non-interest bearing deposits
    
    
    198,316
    
    
    
    
    
    
    
    
    
    
    
    163,953
    
    
    
    
    
    
    
    
    
    
    
    138,931Total deposits and borrowed funds
    
    
    693,967
    
    
    
    
    
    
    
    
    
    
    
    590,726
    
    
    
    
    
    
    
    
    
    
    
    516,544Other liabilities
    
    
    5,766
    
    
    
    
    
    
    
    
    
    
    
    3,615
    
    
    
    
    
    
    
    
    
    
    
    3,492Total liabilities
    
    
    699,733
    
    
    
    
    
    
    
    
    
    
    
    594,341
    
    
    
    
    
    
    
    
    
    
    
    520,036Shareholders equity
    
    
    71,919
    
    
    
    
    
    
    
    
    
    
    
    61,333
    
    
    
    
    
    
    
    
    
    
    
    53,898Total liabilities and
shareholders equity
    
    $
    771,652
    
    
    
    
    
    
    
    
    
    
    $
    655,674
    
    
    
    
    
    
    
    
    
    
    $
    573,934Net interest income (tax equivalent)
    
    
    
    
    
    $
    42,594
    
    
    
    
    
    
    
    
    
    
    $
    35,736
    
    
    
    
    
    
    
    
    
    
    $
    31,820Net interest income (as reported)
    
    
    
    
    
    $
    42,287
    
    
    
    
    
    
    
    
    
    
    $
    35,380
    
    
    
    
    
    
    
    
    
    
    $
    31,399Average yield on average earning
assets (1)
    
    
    
    
    
    
    
    
    
    
    7.53
    %
    
    
    
    
    
    
    
    
    
    
    7.16
    %
    
    
    
    
    
    
    
    
    
    
    7.37
    %Interest expense to average earning
assets
    
    
    
    
    
    
    
    
    
    
    1.58
    %
    
    
    
    
    
    
    
    
    
    
    1.22
    %
    
    
    
    
    
    
    
    
    
    
    1.30
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    5.95
    %
    
    
    
    
    
    
    
    
    
    
    5.95
    %
    
    
    
    
    
    
    
    
    
    
    6.07
    %Net interest spread
    
    
    
    
    
    
    
    
    
    
    5.25
    %
    
    
    
    
    
    
    
    
    
    
    5.44
    %
    
    
    
    
    
    
    
    
    
    
    5.56
    %
 
 (1)
    
    Non-accrual loans and loans held for sale are included in the average balance.(2)
    
    Tax-exempt income has been adjusted to a tax-equivalent basis at a rate of 36.6%.(3)
    
    Net interest margin is computed by dividing net interest income (taxable
equivalent basis) by total average earning assets. Columbia Bancorp 




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##### Table of Contents



 Columbia Bancorp




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##### Table of Contents



Analysis of Changes in Interest Differential.
 Table 7
 2005 over 2004
    
    
    2004 over 2003
    
    
    2003 over 2002Increase (Decrease) due to
    
    

Increase (Decrease) due to
    
    

Increase (Decrease) due toNet
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    Net(dollars in thousands)
    
    Volume
    
    
    Rate
    
    
    Change
    
    
    Volume
    
    
    Rate
    
    
    Change
    
    
    Volume
    
    
    Rate
    
    
    ChangeInterest-earning assets:Loans
    
    $
    5,971
    
    
    $
    3,361
    
    
    $
    9,332
    
    
    $
    7,100
    
    
    $
    (2,356
    )
    
    $
    4,744
    
    
    $
    3,073
    
    
    $
    (1,911
    )
    
    $
    1,162Investment securitiesTaxable securities
    
    
    182
    
    
    
    129
    
    
    
    311
    
    
    
    1
    
    
    
    (80
    )
    
    
    (79
    )
    
    
    (85
    )
    
    
    (436
    )
    
    
    (521
    )Nontaxable securities
    
    
    (20
    )
    
    
    1
    
    
    
    (19
    )
    
    
    (111
    )
    
    
    (1
    )
    
    
    (112
    )
    
    
    (63
    )
    
    
    (15
    )
    
    
    (78
    )Balances due from banks
    
    
    102
    
    
    
    179
    
    
    
    281
    
    
    
    (37
    )
    
    
    (34
    )
    
    
    (71
    )
    
    
    79
    
    
    
    (134
    )
    
    
    (55
    )Federal funds sold
    
    
    341
    
    
    
    635
    
    
    
    976
    
    
    
    (73
    )
    
    
    69
    
    
    
    (4
    )
    
    
    232
    
    
    
    (126
    )
    
    
    106Total
    
    
    6,576
    
    
    
    4,305
    
    
    
    10,881
    
    
    
    6,880
    
    
    
    (2,402
    )
    
    
    4,478
    
    
    
    3,236
    
    
    
    (2,622
    )
    
    
    614Interest bearing liabilities:Interest bearing checking
and savings accounts
    
    
    364
    
    
    
    2,211
    
    
    
    2,575
    
    
    
    88
    
    
    
    (209
    )
    
    
    (121
    )
    
    
    377
    
    
    
    (512
    )
    
    
    (135
    )Time deposits
    
    
    489
    
    
    
    850
    
    
    
    1,339
    
    
    
    918
    
    
    
    (387
    )
    
    
    531
    
    
    
    (139
    )
    
    
    (534
    )
    
    
    (673
    )Borrowed funds
    
    
    (150
    )
    
    
    210
    
    
    
    60
    
    
    
    374
    
    
    
    (287
    )
    
    
    87
    
    
    
    (235
    )
    
    
    92
    
    
    
    (143
    )Total
    
    
    703
    
    
    
    3,271
    
    
    
    3,974
    
    
    
    1,380
    
    
    
    (883
    )
    
    
    497
    
    
    
    3
    
    
    
    (954
    )
    
    
    (951
    )Net increase (decrease) in
net interest income
    
    $
    5,873
    
    
    $
    1,034
    
    
    $
    6,907
    
    
    $
    5,500
    
    
    $
    (1,519
    )
    
    $
    3,981
    
    
    $
    3,233
    
    
    $
    (1,668
    )
    
    $
    1565
  Provision for Loan Losses
   Non-interest Income
  Columbia Bancorp 




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##### Table of Contents



Non-interest Expense
    Columbia Bancorp




---



##### Table of Contents



Income Taxes
   Financial Condition
 Table 8
 Summary Balance SheetsDecember 31,
    
    
    Increase (Decrease)(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2003
    
    
    12/31/04  12/31/05
    
    
    12/31/03  12/31/04ASSETSFederal funds sold
    
    $
    29,282
    
    
    $
    20,286
    
    
    $
    14,956
    
    
    $
    8,996
    
    
    
    44.35
    %
    
    $
    5,330
    
    
    
    35.64
    %Investments
    
    
    36,780
    
    
    
    45,398
    
    
    
    31,682
    
    
    
    (8,618
    )
    
    
    (18.98
    )
    
    
    13,716
    
    
    
    43.29Total loans, net
    
    
    677,686
    
    
    
    574,125
    
    
    
    464,350
    
    
    
    103,561
    
    
    
    18.04
    
    
    
    109,775
    
    
    
    23.64Other assets (1)
    
    
    97,491
    
    
    
    75,564
    
    
    
    73,148
    
    
    
    21,927
    
    
    
    29.02
    
    
    
    2,416
    
    
    
    3.30Total assets
    
    $
    841,239
    
    
    $
    715,373
    
    
    $
    584,136
    
    
    $
    125,866
    
    
    
    17.59
    %
    
    $
    131,237
    
    
    
    22.47
    %LIABILITIESNon-interest bearing
deposits
    
    $
    220,450
    
    
    $
    172,422
    
    
    $
    150,425
    
    
    $
    48,028
    
    
    
    27.85
    %
    
    $
    21,997
    
    
    
    14.62
    %Interest bearing deposits
    
    
    487,372
    
    
    
    434,522
    
    
    
    345,933
    
    
    
    52,850
    
    
    
    12.16
    
    
    
    88,589
    
    
    
    25.61Total deposits
    
    
    707,822
    
    
    
    606,944
    
    
    
    496,358
    
    
    
    100,878
    
    
    
    16.62
    
    
    
    110,586
    
    
    
    22.28Other liabilities (2)
    
    
    55,925
    
    
    
    42,552
    
    
    
    29,974
    
    
    
    13,373
    
    
    
    31.43
    
    
    
    12,578
    
    
    
    41.96Total liabilities
    
    
    763,747
    
    
    
    649,496
    
    
    
    526,332
    
    
    
    114,251
    
    
    
    17.59
    
    
    
    123,164
    
    
    
    23.40SHAREHOLDERS
EQUITY
    
    
    77,492
    
    
    
    65,877
    
    
    
    57,804
    
    
    
    11,615
    
    
    
    17.63
    
    
    
    8,073
    
    
    
    13.97Total liabilities and
shareholders equity
    
    $
    841,239
    
    
    $
    715,373
    
    
    $
    584,136
    
    
    $
    125,866
    
    
    
    17.59
    %
    
    $
    131,237
    
    
    
    22.47
    %
  (1)
  
  Includes cash and due from banks, property and equipment,
accrued interest receivable and intangible goodwill.(2)
  
  Includes accrued interest payable and other liabilities.
 Cash and Cash Equivalents
  Columbia Bancorp 




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##### Table of Contents



Investments
  Table 9
 December 31,
    
    
    December 31,
    
    
    December 31,(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2003Investments available-for-sale:U.S. Government obligations
    
    $
    16,680
    
    
    $
    23,899
    
    
    $
    13,004Municipal securities
    
    
    553
    
    
    
    674
    
    
    
    793Equity securities
    
    
    611
    
    
    
    606
    
    
    
    7917,844
    
    
    
    25,179
    
    
    
    13,876Investments held-to-maturity:Obligations of states and political subdivisions
    
    
    12,053
    
    
    
    12,535
    
    
    
    13,016Mortgage-backed securities
    
    
    4,363
    
    
    
    5,174
    
    
    
    1,867U.S. Government obligations
    
    
    81
    
    
    
    81
    
    
    
    8116,497
    
    
    
    17,790
    
    
    
    14,964Restricted equity securities
    
    
    2,439
    
    
    
    2,429
    
    
    
    2,842Total investment securities
    
    $
    36,780
    
    
    $
    45,398
    
    
    $
    31,682
       Columbia Bancorp




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##### Table of Contents



Table 10
 December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003Amortized
    
    
    Estimated
    
    
    %
    
    
    Amortized
    
    
    Estimated
    
    
    %
    
    
    Amortized
    
    
    Estimated
    
    
    %(dollars in thousands)
    
    Cost
    
    
    Fair Value
    
    
    Yield(1)
    
    
    Cost
    
    
    Fair Value
    
    
    Yield(1)
    
    
    Cost
    
    
    Fair Value
    
    
    Yield(1)U.S. Government
agencies:One year or less
    
    $
    8,347
    
    
    $
    8,258
    
    
    
    4.92
    %
    
    $
    9,287
    
    
    $
    9,287
    
    
    
    3.94
    %
    
    $
    8,402
    
    
    $
    8,458
    
    
    
    2.27
    %One to five years
    
    
    12,664
    
    
    
    12,393
    
    
    
    4.80
    %
    
    
    19,496
    
    
    
    19,355
    
    
    
    3.88
    %
    
    
    6,526
    
    
    
    6,555
    
    
    
    2.67
    %Five to ten years
    
    
    441
    
    
    
    435
    
    
    
    4.15
    %
    
    
    215
    
    
    
    217
    
    
    
    4.73
    %
    
    
    
    
    
    
    
    
    
    
    Over ten years
    
    
    7
    
    
    
    7
    
    
    
    6.18
    %
    
    
    303
    
    
    
    305
    
    
    
    4.67
    %
    
    
    
    
    
    
    
    
    
    
    Obligations of states
and political
subdivisions:One year or less
    
    
    1,171
    
    
    
    1,173
    
    
    
    5.17
    %
    
    
    155
    
    
    
    156
    
    
    
    2.93
    %
    
    
    865
    
    
    
    873
    
    
    
    5.02
    %One to five years
    
    
    3,031
    
    
    
    3,081
    
    
    
    6.27
    %
    
    
    3,267
    
    
    
    3,375
    
    
    
    4.93
    %
    
    
    2,292
    
    
    
    2,418
    
    
    
    3.82
    %Five to ten years
    
    
    7,943
    
    
    
    8,198
    
    
    
    6.16
    %
    
    
    9,124
    
    
    
    9,590
    
    
    
    6.16
    %
    
    
    9,169
    
    
    
    9,816
    
    
    
    5.83
    %Over ten years
    
    
    449
    
    
    
    437
    
    
    
    6.89
    %
    
    
    627
    
    
    
    683
    
    
    
    6.15
    %
    
    
    1,430
    
    
    
    1,520
    
    
    
    6.37
    %Total debt securities
    
    
    34,053
    
    
    
    33,982
    
    
    
    5.32
    %
    
    
    42,474
    
    
    
    42,968
    
    
    
    4.46
    %
    
    
    28,684
    
    
    
    29,640
    
    
    
    3.96
    %Equity securities
    
    
    596
    
    
    
    611
    
    
    
    
    
    
    
    577
    
    
    
    606
    
    
    
    
    
    
    
    75
    
    
    
    79Restricted equity securities
    
    
    2,439
    
    
    
    2,439
    
    
    
    
    
    
    
    2,429
    
    
    
    2,429
    
    
    
    
    
    
    
    2,843
    
    
    
    2,843Total securities
    
    $
    37,088
    
    
    $
    37,032
    
    
    
    
    
    
    $
    45,480
    
    
    $
    46,003
    
    
    
    
    
    
    $
    31,602
    
    
    $
    32,562
 
 (1)
    
    Weighted average yields are stated on a federal tax equivalent basis at a rate of 36.6% and have been annualized, where appropriate. Loans
   Columbia Bancorp 




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##### Table of Contents




Columbia Bancorp




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##### Table of Contents



Table 11
 December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2003(dollars in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageCommercial
    
    $
    101,261
    
    
    
    15.07
    %
    
    $
    93,618
    
    
    
    16.38
    %
    
    $
    86,163
    
    
    
    18.67
    %Agricultural
    
    
    84,271
    
    
    
    12.54
    %
    
    
    79,224
    
    
    
    13.86
    %
    
    
    64,059
    
    
    
    13.88
    %Real estate secured loans:Commercial property
    
    
    199,065
    
    
    
    29.63
    %
    
    
    156,175
    
    
    
    27.32
    %
    
    
    125,359
    
    
    
    27.16
    %Farmland
    
    
    46,518
    
    
    
    6.92
    %
    
    
    50,585
    
    
    
    8.85
    %
    
    
    42,301
    
    
    
    9.17
    %Construction
    
    
    184,331
    
    
    
    27.44
    %
    
    
    139,415
    
    
    
    24.39
    %
    
    
    87,427
    
    
    
    18.94
    %Residential
    
    
    30,955
    
    
    
    4.61
    %
    
    
    29,584
    
    
    
    5.18
    %
    
    
    34,295
    
    
    
    7.43
    %Home equity lines
    
    
    14,747
    
    
    
    2.20
    %
    
    
    10,701
    
    
    
    1.87
    %
    
    
    4,799
    
    
    
    1.04
    %Total real estate
    
    
    475,616
    
    
    
    70.80
    %
    
    
    386,460
    
    
    
    67.61
    %
    
    
    294,181
    
    
    
    63.74
    %Consumer
    
    
    13,775
    
    
    
    2.05
    %
    
    
    14,386
    
    
    
    2.51
    %
    
    
    18,242
    
    
    
    3.95
    %Other
    
    
    7,923
    
    
    
    1.18
    %
    
    
    7,660
    
    
    
    1.34
    %
    
    
    6,975
    
    
    
    1.51
    %Total loans
    
    
    682,846
    
    
    
    101.64
    %
    
    
    581,348
    
    
    
    101.70
    %
    
    
    469,620
    
    
    
    101.75
    %Less unearned loan fees
    
    
    (1,513
    )
    
    
    (0.22
    )%
    
    
    (1,556
    )
    
    
    (0.27
    )%
    
    
    (1,450
    )
    
    
    (0.32
    )%Less allowance for loan losses
    
    
    (9,526
    )
    
    
    (1.42
    )%
    
    
    (8,184
    )
    
    
    (1.43
    )%
    
    
    (6,612
    )
    
    
    (1.43
    )%Loans receivable, net
    
    $
    671,807
    
    
    
    100.00
    %
    
    $
    571,608
    
    
    
    100.00
    %
    
    $
    461,558
    
    
    
    100.00
    %Volume change from prior year
    
    
    
    
    
    
    17.53
    %
    
    
    
    
    
    
    23.84
    %
    
    
    
    
    
    
    8.88
    %
 December 31, 2002
    
    
    December 31, 2001Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageCommercial
    
    $
    69,882
    
    
    
    16.48
    %
    
    $
    64,163
    
    
    
    17.76
    %Agricultural
    
    
    61,770
    
    
    
    14.57
    %
    
    
    54,934
    
    
    
    15.20
    %Real estate secured loans:Commercial property
    
    
    100,918
    
    
    
    23.81
    %
    
    
    80,092
    
    
    
    22.17
    %Farmland
    
    
    35,748
    
    
    
    8.43
    %
    
    
    25,292
    
    
    
    7.00
    %Construction
    
    
    91,036
    
    
    
    21.47
    %
    
    
    70,474
    
    
    
    19.50
    %Residential
    
    
    42,688
    
    
    
    10.07
    %
    
    
    44,512
    
    
    
    12.32
    %Home equity lines
    
    
    2,102
    
    
    
    0.50
    %
    
    
    3,309
    
    
    
    0.92
    %Total real estate
    
    
    272,492
    
    
    
    64.28
    %
    
    
    223,679
    
    
    
    61.91
    %Consumer
    
    
    20,937
    
    
    
    4.94
    %
    
    
    19,802
    
    
    
    5.48
    %Other
    
    
    6,499
    
    
    
    1.53
    %
    
    
    5,251
    
    
    
    1.45
    %Total loans
    
    
    431,580
    
    
    
    101.80
    %
    
    
    367,829
    
    
    
    101.80
    %Less unearned loan fees
    
    
    (1,245
    )
    
    
    (0.29
    )%
    
    
    (1,194
    )
    
    
    (0.33
    )%Less allowance for loan losses
    
    
    (6,417
    )
    
    
    (1.51
    )%
    
    
    (5,312
    )
    
    
    (1.47
    )%Loans receivable, net
    
    $
    423,918
    
    
    
    100.00
    %
    
    $
    361,323
    
    
    
    100.00
    %Volume change from prior year
    
    
    
    
    
    
    17.32
    %
    
    
    
    
    
    
    20.49
    %
 Columbia Bancorp 




---



##### Table of Contents



Table 12
 December 31, 2005Less than
    
    3 months-
    
    
    
    
    
    
    
    
    
    Over
    
    Total(dollars in thousands)
    
    3 months
    
    1 year
    
    1-5 years
    
    5-10 years
    
    10 years
    
    loansCommercial loans
    
    $
    59,231
    
    
    $
    5,070
    
    
    $
    35,561
    
    
    $
    1,029
    
    
    $
    370
    
    
    $
    101,261Agricultural loans
    
    
    75,001
    
    
    
    3,002
    
    
    
    5,934
    
    
    
    334
    
    
    
    
    
    
    
    84,271Real estate secured loans:Commercial property
    
    
    27,922
    
    
    
    25,147
    
    
    
    139,279
    
    
    
    3,333
    
    
    
    3,384
    
    
    
    199,065Farmland
    
    
    7,258
    
    
    
    7,453
    
    
    
    26,654
    
    
    
    2,554
    
    
    
    2,599
    
    
    
    46,518Construction
    
    
    177,865
    
    
    
    1,626
    
    
    
    4,771
    
    
    
    69
    
    
    
    
    
    
    
    184,331Residential
    
    
    9,138
    
    
    
    4,691
    
    
    
    9,116
    
    
    
    3,608
    
    
    
    4,402
    
    
    
    30,955Home equity lines
    
    
    14,693
    
    
    
    
    
    
    
    15
    
    
    
    39
    
    
    
    
    
    
    
    14,747Total real estate loans
    
    
    236,876
    
    
    
    38,917
    
    
    
    179,835
    
    
    
    9,603
    
    
    
    10,385
    
    
    
    475,616Consumer
    
    
    7,659
    
    
    
    751
    
    
    
    4,701
    
    
    
    487
    
    
    
    177
    
    
    
    13,775Other
    
    
    5,305
    
    
    
    3
    
    
    
    1,185
    
    
    
    298
    
    
    
    1,132
    
    
    
    7,923Total loans
    
    $
    384,072
    
    
    $
    47,743
    
    
    $
    227,216
    
    
    $
    11,751
    
    
    $
    12,064
    
    
    $
    682,846Loans with fixed interest rates
    
    
    
    
    
    $
    73,805Loans with variable interest rates  daily reprice
    
    
    
    
    
    
    366,278Loans with variable interest rates  other than daily reprice
    
    
    
    
    
    
    242,763Total loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    682,846Loans with rate floors
    
    
    
    
    
    $
    316,332Loans with variable interest rates  daily reprice  on or under rate floors
    
    
    
    
    
    $
    89Loans with variable interest rates  other than daily reprice  on or under rate floors
    
    
    
    
    
    $
    489
  Allowance for Loan and Lease Losses
  
    
    Loss allocation to groups of loans by internal risk grade
    
    Loss allocation by loan type
    
    Loss allocation by historical loss percentage
   
Columbia Bancorp




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##### Table of Contents



Table 13
 Years Ended December 31,(dollars in thousands)
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Loans outstanding at end of period, net of
unearned loan fees (1)
    
    $
    687,211
    
    
    $
    582,310
    
    
    $
    470,962
    
    
    $
    439,104
    
    
    $
    385,595Average loans outstanding for the period (1)
    
    $
    625,195
    
    
    $
    544,945
    
    
    $
    456,137
    
    
    $
    419,608
    
    
    $
    348,239Allowance for loan losses balance, beginning of year
    
    $
    8,184
    
    
    $
    6,612
    
    
    $
    6,417
    
    
    $
    5,312
    
    
    $
    4,578Loans charged off:Commercial
    
    
    (1,261
    )
    
    
    (762
    )
    
    
    (417
    )
    
    
    (319
    )
    
    
    (587
    )Real estate
    
    
    (168
    )
    
    
    (116
    )
    
    
    (1,569
    )
    
    
    (197
    )
    
    
    (56
    )Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    Agriculture
    
    
    (156
    )
    
    
    (80
    )
    
    
    (40
    )
    
    
    (15
    )
    
    
    (79
    )Consumer loans
    
    
    (111
    )
    
    
    (198
    )
    
    
    (412
    )
    
    
    (206
    )
    
    
    (20
    )Consumer overdrafts
    
    
    (165
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credit card and related accounts
    
    
    (101
    )
    
    
    (135
    )
    
    
    (96
    )
    
    
    (91
    )
    
    
    (57
    )Total loans charged off
    
    
    (1,962
    )
    
    
    (1,291
    )
    
    
    (2,534
    )
    
    
    (886
    )
    
    
    (799
    )Recoveries:Commercial
    
    
    79
    
    
    
    67
    
    
    
    50
    
    
    
    97
    
    
    
    71Real estate
    
    
    9
    
    
    
    8
    
    
    
    35
    
    
    
    
    
    
    
    1Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    Agriculture
    
    
    5
    
    
    
    4
    
    
    
    28
    
    
    
    11
    
    
    
    Consumer loans
    
    
    32
    
    
    
    13
    
    
    
    31
    
    
    
    72
    
    
    
    5Consumer overdrafts
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credit card and related accounts
    
    
    4
    
    
    
    11
    
    
    
    10
    
    
    
    5
    
    
    
    6Total recoveries
    
    
    189
    
    
    
    103
    
    
    
    154
    
    
    
    191
    
    
    
    83Net charge-offs
    
    
    (1,773
    )
    
    
    (1,188
    )
    
    
    (2,380
    )
    
    
    (695
    )
    
    
    (716
    )Provision for loan losses
    
    
    3,115
    
    
    
    2,760
    
    
    
    2,575
    
    
    
    1,800
    
    
    
    1,450Allowance for loan losses balance, end of period
    
    $
    9,526
    
    
    $
    8,184
    
    
    $
    6,612
    
    
    $
    6,417
    
    
    $
    5,312Ratio of net loans charged off to
average loans outstanding
    
    
    0.28
    %
    
    
    0.22
    %
    
    
    0.52
    %
    
    
    0.17
    %
    
    
    0.21
    %Ratio of allowance for loan losses to loans at
end of period
    
    
    1.38
    %
    
    
    1.40
    %
    
    
    1.40
    %
    
    
    1.46
    %
    
    
    1.38
    %
 
 (1)
    
    Includes loans held-for-sale.  Columbia Bancorp 




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##### Table of Contents



Non-performing Assets
  
Columbia Bancorp




---



##### Table of Contents



Table 14
 December 31,(dollars in thousands)
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Loans on non-accrual status
    
    $
    5,688
    
    
    $
    4,217
    
    
    $
    3,292
    
    
    $
    742
    
    
    $
    890Loans past due  greater than 90 days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    Restructured loans
    
    
    40
    
    
    
    
    
    
    
    10
    
    
    
    25
    
    
    
    113Total non-performing loans
    
    
    5,728
    
    
    
    4,217
    
    
    
    3,302
    
    
    
    772
    
    
    
    1,003Other real estate owned
    
    
    
    
    
    
    100
    
    
    
    42
    
    
    
    
    
    
    
    349Total non-performing assets
    
    $
    5,728
    
    
    $
    4,317
    
    
    $
    3,344
    
    
    $
    772
    
    
    $
    1,352Allowance for loan losses
    
    $
    9,526
    
    
    $
    8,184
    
    
    $
    6,612
    
    
    $
    6,417
    
    
    $
    5,312Ratio of total non-performing assets to
total assets
    
    
    0.68
    %
    
    
    0.60
    %
    
    
    0.57
    %
    
    
    0.14
    %
    
    
    0.28
    %Ratio of total non-performing loans to
total loans, net of unearned loan fees
    
    
    0.85
    %
    
    
    0.74
    %
    
    
    0.71
    %
    
    
    0.18
    %
    
    
    0.26
    %Ratio of reserve for loan losses to
total non-performing assets
    
    
    166.30
    %
    
    
    189.57
    %
    
    
    197.74
    %
    
    
    830.73
    %
    
    
    392.82
    %
  Columbia Bancorp 




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##### Table of Contents



Deposits
   Table 15
 December 31, 2005
    
    December 31, 2004
    
    December 31, 2003(dollars in thousands)
    
    Amount
    
    Percentage
    
    Amount
    
    Percentage
    
    Amount
    
    PercentageInterest bearing demand deposits
    
    $
    278,070
    
    
    
    39.29
    %
    
    $
    211,240
    
    
    
    34.81
    %
    
    $
    187,452
    
    
    
    37.76
    %Savings deposits
    
    
    41,128
    
    
    
    5.81
    
    
    
    35,926
    
    
    
    5.92
    
    
    
    35,733
    
    
    
    7.20Time certificates less than $100,000
    
    
    73,508
    
    
    
    10.39
    
    
    
    83,242
    
    
    
    13.71
    
    
    
    84,414
    
    
    
    17.01Time certificates greater than $100,000
    
    
    94,666
    
    
    
    13.37
    
    
    
    104,114
    
    
    
    17.15
    
    
    
    38,334
    
    
    
    7.72Total interest bearing
deposits
    
    
    487,372
    
    
    
    68.86
    
    
    
    434,522
    
    
    
    71.59
    
    
    
    345,933
    
    
    
    69.69Total non-interest bearing
deposits
    
    
    220,450
    
    
    
    31.14
    
    
    
    172,422
    
    
    
    28.41
    
    
    
    150,425
    
    
    
    30.31Total interest bearing and
non-interest bearing
deposits
    
    $
    707,822
    
    
    
    100.00
    %
    
    $
    606,944
    
    
    
    100.00
    %
    
    $
    496,358
    
    
    
    100.00
    %
    Table 16
 Years ended December 31,2005 Averages
    
    
    2004 Averages
    
    
    2003 Averages(dollars in thousands)
    
    Amount
    
    
    Rate Paid
    
    
    Amount
    
    
    Rate Paid
    
    
    Amount
    
    
    Rate PaidNon-interest bearing deposits
    
    $
    198,316
    
    
    
    N/A
    
    
    $
    163,953
    
    
    
    N/A
    
    
    $
    138,931
    
    
    
    N/AInterest bearing demand deposits
    
    
    248,544
    
    
    
    1.50
    %
    
    
    194,534
    
    
    
    0.69
    %
    
    
    189,353
    
    
    
    0.79
    %Savings deposits
    
    
    38,960
    
    
    
    0.84
    %
    
    
    36,292
    
    
    
    0.39
    %
    
    
    33,687
    
    
    
    0.50
    %Time certificates
    
    
    174,495
    
    
    
    3.38
    %
    
    
    157,854
    
    
    
    2.89
    %
    
    
    125,360
    
    
    
    3.13
    %Total deposits
    
    $
    660,315
    
    
    
    
    
    
    $
    552,633
    
    
    
    
    
    
    $
    487,331
 37 - Columbia Bancorp




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##### Table of Contents



Table 17
 Time Certificates
    
    Time Certificates(dollars in thousands)
    
    less than $100,000
    
    greater than $100,000
    
    TotalThree months or less
    
    $
    15,352
    
    
    $
    34,358
    
    
    $
    49,710Over three through six months
    
    
    12,009
    
    
    
    10,584
    
    
    
    22,593Over six months through twelve months
    
    
    18,427
    
    
    
    16,288
    
    
    
    34,715Over twelve months through five years
    
    
    27,444
    
    
    
    33,436
    
    
    
    60,880Over five years
    
    
    276
    
    
    
    
    
    
    
    276$
    73,508
    
    
    $
    94,666
    
    
    $
    168,174
 Long-Term and Short-Term Borrowings
  Columbia Bancorp - 38




---



##### Table of Contents



Table 18
 December 31,(dollars in thousands)
    
    2005
    
    2004
    
    2003Amount outstanding at end of period
    
    $
    44,841
    
    
    $
    34,040
    
    
    $
    21,133Weighted-average interest rate at end of period
    
    
    4.09
    %
    
    
    3.41
    %
    
    
    3.44
    %Maximum amount outstanding at any month-end during the year
    
    $
    44,841
    
    
    $
    46,941
    
    
    $
    27,372Average amount outstanding during the period
    
    $
    34,380
    
    
    $
    30,023
    
    
    $
    23,672Weighted-average interest rate during the period
    
    
    3.64
    %
    
    
    3.36
    %
    
    
    3.90
    %
 Trust Preferred Securities
   Shareholders Equity and Regulatory Capital
   39 - Columbia Bancorp




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##### Table of Contents



Table 19
 Total # of Shares Purchased
    
    
    Maximum Dollar Value ofTotal # of Shares
    
    
    Average Price
    
    
    as Part of a Publicly
    
    
    Shares Remaining to bePurchased
    
    
    Paid per Share
    
    
    Announced Plan(s)(1)
    
    
    Purchased Under the Plan(s)(1)January
-04
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    1,352,005February-
04
    
    
    12,500
    
    
    
    18.10
    
    
    
    12,500
    
    
    
    1,125,776March-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,125,776Three Months Ended
March 31, 2004
    
    
    12,500
    
    
    
    18.10
    
    
    
    12,500
    
    
    
    1,125,776April-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,125,776May-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,125,776June-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,125,776Three Months Ended
June 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,125,776July-04(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000August-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000September-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Three Months Ended
September 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000October-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000November-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000December-04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Three Months Ended
December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Twelve
Months
Ended
December
31, 2004
    
    
    12,500
    
    
    $
    18.10
    
    
    
    12,500
    
    
    $
    1,000,000January-05
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    1,000,000February-
05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000March-05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Three Months Ended
March 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000April-05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000May-05(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000June-05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Three Months Ended
June 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000July-06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000August-05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000September-05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Three Months Ended
September 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000October-05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000November-05
    
    
    3,570
    
    
    
    21.96
    
    
    
    3,570
    
    
    
    921,601December-05
    
    
    2,800
    
    
    
    21.96
    
    
    
    2,800
    
    
    
    860,122Three Months Ended
December 31, 2005
    
    
    6,370
    
    
    
    21.96
    
    
    
    6,370
    
    
    
    860,122Twelve
Months
Ended
December
31, 2005
    
    
    6,370
    
    
    $
    21.96
    
    
    
    6,370
    
    
    $
    860,122
 
 (1)
    
    Plan announced in August 2003, to repurchase up to $1.6 million in stock through June 30, 2004.(2)
    
    New repurchase plan approved by the Board of Directors to repurchase up to $1.0 million in stock through June 30, 2005.(3)
    
    Repurchase plan extended by the Board of Directors to repurchase up to $1.0 million in stock through June 30, 2006. Columbia Bancorp - 40




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##### Table of Contents



Table 20
 December 31, 2005
    
    December 31, 2004
    
    Regulatory MinimumTier I capital
    
    
    9.70
    %
    
    
    9.80
    %
    
    
    4.00
    %Total risk-based capital
    
    
    10.95
    %
    
    
    11.05
    %
    
    
    8.00
    %Leverage ratio
    
    
    9.77
    %
    
    
    8.74
    %
    
    
    4.00
    %
 Liquidity and Capital Resources
    41 - Columbia Bancorp




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##### Table of Contents



Inflation
  Off-Balance Sheet Arrangements
   Table 21
 December 31,(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2003Commitments to extend credit
    
    $
    200,916
    
    
    $
    168,812
    
    
    $
    162,232Undisbursed credit card lines of credit
    
    
    19,582
    
    
    
    18,437
    
    
    
    17,333Commercial and standby letters of credit
    
    
    2,309
    
    
    
    2,227
    
    
    
    2,466Total
    
    $
    222,807
    
    
    $
    189,476
    
    
    $
    182,031
 Columbia Bancorp - 42




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##### Table of Contents



Contractual Obligations
  Table 22
 Payment due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More than
    
    
    Unspecified(dollars in thousands)
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years
    
    
    maturityLong-term debt obligationsFederal Home Loan Bank notes
    
    $
    44,841
    
    
    $
    23,000
    
    
    $
    19,220
    
    
    $
    1,952
    
    
    $
    669
    
    
    $
    Trust preferred securities (1)
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    Treasury tax and loan note
    
    
    850
    
    
    
    850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    9,665
    
    
    
    856
    
    
    
    1,669
    
    
    
    1,612
    
    
    
    5,528
    
    
    
    Other long term liabilities(2)
    
    
    1,194
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,194Total
    
    $
    60,550
    
    
    $
    24,706
    
    
    $
    20,889
    
    
    $
    3,564
    
    
    $
    10,197
    
    
    $
    1,194
 
 (1)
    
    Columbia has the right to redeem trust preferred securities on or after January 7, 2008. This commitment
excludes $124 of initial trust capitalization.(2)
    
    Amount includes deferred compensation and salary continuation plan benefit obligations. Recently Issued Accounting Standards
     43 - Columbia Bancorp




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk Management
    Table 23
 Percent Change
    
    Percent Changein Net Interest
    
    in Present ValueChange in Interest Rates
    
    Income
    
    of Equity-200 Basis points
    
    
    -9.71
    %
    
    
    -7.81
    %-100 Basis points
    
    
    -5.26
    %
    
    
    -4.39
    %+100 Basis points
    
    
    5.43
    %
    
    
    4.59
    %+200 Basis points
    
    
    10.88
    %
    
    
    9.00
    %
   Columbia Bancorp - 44




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Selected Quarterly Financial Data (unaudited)
 Table 24
 2005 Quarterly Financial DataFirst
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands except per share data)
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalIncome Statement DataInterest income
    
    $
    12,172
    
    
    $
    12,715
    
    
    $
    13,998
    
    
    $
    14,704
    
    
    $
    53,589Interest expense
    
    
    2,511
    
    
    
    2,643
    
    
    
    2,937
    
    
    
    3,211
    
    
    
    11,302Net interest income
    
    
    9,661
    
    
    
    10,072
    
    
    
    11,061
    
    
    
    11,493
    
    
    
    42,287Loan loss provision
    
    
    200
    
    
    
    650
    
    
    
    1,230
    
    
    
    1,035
    
    
    
    3,115Net interest income after
loan loss provision
    
    
    9,461
    
    
    
    9,422
    
    
    
    9,831
    
    
    
    10,458
    
    
    
    39,172Non-interest income
    
    
    2,303
    
    
    
    2,984
    
    
    
    2,540
    
    
    
    2,361
    
    
    
    10,188Non-interest expense
    
    
    6,571
    
    
    
    6,977
    
    
    
    7,141
    
    
    
    7,472
    
    
    
    28,161Income before provision for
income taxes
    
    
    5,193
    
    
    
    5,429
    
    
    
    5,230
    
    
    
    5,347
    
    
    
    21,199Provision for income taxes
    
    
    1,880
    
    
    
    1,987
    
    
    
    1,704
    
    
    
    1,958
    
    
    
    7,529Net income
    
    $
    3,313
    
    
    $
    3,442
    
    
    $
    3,526
    
    
    $
    3,389
    
    
    $
    13,670Earnings Per ShareBasic earnings per common share
    
    $
    0.34
    
    
    $
    0.35
    
    
    $
    0.36
    
    
    $
    0.34
    
    
    $
    1.39Diluted earnings per common share
    
    $
    0.33
    
    
    $
    0.34
    
    
    $
    0.35
    
    
    $
    0.34
    
    
    $
    1.36
 2004 Quarterly Financial DataFirst
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalIncome Statement DataInterest income
    
    $
    9,607
    
    
    $
    10,352
    
    
    $
    11,208
    
    
    $
    11,541
    
    
    $
    42,708Interest expense
    
    
    1,467
    
    
    
    1,554
    
    
    
    2,027
    
    
    
    2,280
    
    
    
    7,328Net interest income
    
    
    8,140
    
    
    
    8,798
    
    
    
    9,181
    
    
    
    9,261
    
    
    
    35,380Loan loss provision
    
    
    700
    
    
    
    1,390
    
    
    
    550
    
    
    
    120
    
    
    
    2,760Net interest income after
loan loss provision
    
    
    7,440
    
    
    
    7,408
    
    
    
    8,631
    
    
    
    9,141
    
    
    
    32,620Non-interest income
    
    
    1,581
    
    
    
    1,917
    
    
    
    2,016
    
    
    
    2,798
    
    
    
    8,312Non-interest expense
    
    
    5,871
    
    
    
    5,674
    
    
    
    6,013
    
    
    
    6,413
    
    
    
    23,971Income before provision for
income taxes
    
    
    3,150
    
    
    
    3,651
    
    
    
    4,634
    
    
    
    5,526
    
    
    
    16,961Provision for income taxes
    
    
    1,133
    
    
    
    1,336
    
    
    
    1,736
    
    
    
    2,021
    
    
    
    6,226Net income
    
    $
    2,017
    
    
    $
    2,315
    
    
    $
    2,898
    
    
    $
    3,505
    
    
    $
    10,735Earnings Per ShareBasic earnings per common share (1)
    
    $
    0.21
    
    
    $
    0.24
    
    
    $
    0.30
    
    
    $
    0.36
    
    
    $
    1.11Diluted earnings per common share (1)
    
    $
    0.20
    
    
    $
    0.24
    
    
    $
    0.29
    
    
    $
    0.35
    
    
    $
    1.08
 
 (1)
    
    Prior periods have been adjusted to reflect the 10% stock dividend, effective December 29, 2005.  45 - Columbia Bancorp




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Columbia Bancorp - 46




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
 
 47 - Columbia Bancorp




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETSCASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    34,631,688
    
    
    $
    25,527,270Interest-bearing deposits with banks
    
    
    23,175,188
    
    
    
    12,165,712Federal funds sold
    
    
    29,281,599
    
    
    
    20,285,817Total cash and cash equivalents
    
    
    87,088,475
    
    
    
    57,978,799INVESTMENT SECURITIESDebt securities available-for-sale, at fair value
    
    
    17,233,060
    
    
    
    24,573,394Equity securities available-for-sale, at fair value
    
    
    611,148
    
    
    
    605,594Debt securities held-to-maturity, at amortized cost,
estimated fair value $16,749,021 and $18,395,204 at
December 31, 2005 and 2004, respectively
    
    
    16,497,131
    
    
    
    17,789,481Restricted equity securities
    
    
    2,439,100
    
    
    
    2,429,200Total investment securities
    
    
    36,780,439
    
    
    
    45,397,669LOANSLoans held-for-sale
    
    
    5,879,320
    
    
    
    2,517,182Loans, net of allowance for loan losses and unearned loan fees
    
    
    671,806,637
    
    
    
    571,607,850Total loans
    
    
    677,685,957
    
    
    
    574,125,032OTHER ASSETSProperty and equipment, net of accumulated depreciation
    
    
    15,783,509
    
    
    
    15,222,622Accrued interest receivable
    
    
    5,615,098
    
    
    
    4,107,806Goodwill
    
    
    7,389,094
    
    
    
    7,389,094Mortgage servicing asset, net of accumulated
amortization and valuation allowance
    
    
    
    
    
    
    2,162,654Other assets
    
    
    10,896,746
    
    
    
    8,988,842Total other assets
    
    
    39,684,447
    
    
    
    37,871,018TOTAL ASSETS
    
    $
    841,239,318
    
    
    $
    715,372,518LIABILITIES AND SHAREHOLDERS EQUITYDEPOSITSNoninterest-bearing demand deposits
    
    $
    220,450,133
    
    
    $
    172,421,947Interest-bearing demand deposits
    
    
    278,070,340
    
    
    
    211,239,408Savings accounts
    
    
    41,127,626
    
    
    
    35,926,117Time certificates
    
    
    168,174,061
    
    
    
    187,356,091Total deposits
    
    
    707,822,160
    
    
    
    606,943,563OTHER LIABILITIESNotes payable
    
    
    45,690,951
    
    
    
    34,889,564Accrued interest payable and other liabilities
    
    
    6,109,717
    
    
    
    3,538,413Junior subordinated debentures
    
    
    4,124,000
    
    
    
    4,124,000Total other liabilities
    
    
    55,924,668
    
    
    
    42,551,977Total liabilities
    
    
    763,746,828
    
    
    
    649,495,540COMMITMENTS AND CONTINGENCIES (Note 19)SHAREHOLDERS EQUITYCommon stock, no par value, 20,000,000 shares authorized;
8,965,408 and 8,839,151 shares issued and outstanding
at December 31, 2005 and 2004, respectively
    
    
    33,425,084
    
    
    
    32,140,776Retained earnings
    
    
    44,189,700
    
    
    
    33,816,489Accumulated comprehensive (loss) income, net of taxes
    
    
    (122,294
    )
    
    
    (80,287
    )Total shareholders equity
    
    
    77,492,490
    
    
    
    65,876,978TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    841,239,318
    
    
    $
    715,372,518
  Columbia Bancorp - 48




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 Years Ended December 31,2005
    
    
    2004
    
    
    2003INTEREST INCOMEInterest and fees on loans
    
    $
    50,571,586
    
    
    $
    41,239,595
    
    
    $
    36,496,259Interest on investments:Taxable investment securities
    
    
    746,378
    
    
    
    434,568
    
    
    
    514,195Nontaxable investment securities
    
    
    597,220
    
    
    
    617,105
    
    
    
    729,022Interest on federal funds sold
    
    
    1,177,151
    
    
    
    201,278
    
    
    
    205,367Other interest and dividend income
    
    
    496,144
    
    
    
    215,417
    
    
    
    285,276Total interest income
    
    
    53,588,479
    
    
    
    42,707,963
    
    
    
    38,230,119INTEREST EXPENSEInterest on interest-bearing demand deposit
and savings accounts
    
    
    4,050,872
    
    
    
    1,475,891
    
    
    
    1,665,626Interest on time certificates
    
    
    5,892,640
    
    
    
    4,554,432
    
    
    
    3,954,361Other borrowed funds
    
    
    1,358,034
    
    
    
    1,297,755
    
    
    
    1,210,653Total interest expense
    
    
    11,301,546
    
    
    
    7,328,078
    
    
    
    6,830,640NET INTEREST INCOME BEFORE PROVISION
FOR LOAN LOSSES
    
    
    42,286,933
    
    
    
    35,379,885
    
    
    
    31,399,479PROVISION FOR LOAN LOSSES
    
    
    3,115,000
    
    
    
    2,760,000
    
    
    
    2,575,000NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
    
    
    39,171,933
    
    
    
    32,619,885
    
    
    
    28,824,479NON-INTEREST INCOMEService charges and fees
    
    
    4,733,439
    
    
    
    4,657,884
    
    
    
    4,307,634CRB Mortgage Team net revenues
    
    
    2,746,571
    
    
    
    1,121,546
    
    
    
    2,431,672CRB Financial Services Team revenues
    
    
    612,702
    
    
    
    520,427
    
    
    
    579,388Credit card discounts and fees
    
    
    484,310
    
    
    
    465,481
    
    
    
    436,953Net (loss) gain on sale or call of investment securities
    
    
    (1,422
    )
    
    
    (6,823
    )
    
    
    462,249Gain on sale of mortgage servicing asset
    
    
    560,588
    
    
    
    
    
    
    
    Other non-interest income
    
    
    1,052,233
    
    
    
    1,553,040
    
    
    
    705,881Total non-interest income
    
    
    10,188,421
    
    
    
    8,311,555
    
    
    
    8,923,777NON-INTEREST EXPENSESalaries and employee benefits
    
    
    16,529,743
    
    
    
    13,402,913
    
    
    
    13,055,840Occupancy expense
    
    
    3,124,787
    
    
    
    2,654,462
    
    
    
    2,247,309Item and statement processing
    
    
    771,003
    
    
    
    774,591
    
    
    
    777,594Advertising
    
    
    741,637
    
    
    
    811,067
    
    
    
    536,871Data processing expense
    
    
    461,526
    
    
    
    512,770
    
    
    
    352,743Other non-interest expense
    
    
    6,532,665
    
    
    
    5,815,286
    
    
    
    5,379,794Total non-interest expense
    
    
    28,161,361
    
    
    
    23,971,089
    
    
    
    22,350,151INCOME BEFORE PROVISION FOR
INCOME TAXES
    
    
    21,198,993
    
    
    
    16,960,351
    
    
    
    15,398,105PROVISION FOR INCOME TAXES
    
    
    7,528,831
    
    
    
    6,225,661
    
    
    
    5,564,309NET INCOME
    
    
    13,670,162
    
    
    
    10,734,690
    
    
    
    9,833,796OTHER COMPREHENSIVE INCOME (LOSS)Unrealized (losses) gains on securities:Unrealized holding (losses) gains arising during the period
    
    
    (143,729
    )
    
    
    (92,800
    )
    
    
    173,809Reclassification adjustment for losses (gains)
included in net income
    
    
    901
    
    
    
    4,326
    
    
    
    (295,839
    )Increase (reduction) in fair value of interest-rate swap
    
    
    100,821
    
    
    
    (23,812
    )
    
    
    (20,221
    )Other comprehensive loss, net of taxes
    
    
    (42,007
    )
    
    
    (112,286
    )
    
    
    (142,251
    )COMPREHENSIVE INCOME
    
    $
    13,628,155
    
    
    $
    10,622,404
    
    
    $
    9,691,545BASIC EARNINGS PER SHARE OF COMMON
STOCK
    
    $
    1.39
    
    
    $
    1.11
    
    
    $
    1.03DILUTED EARNINGS PER SHARE OF
COMMON STOCK
    
    $
    1.36
    
    
    $
    1.08
    
    
    $
    0.99
  49 - Columbia Bancorp




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedComprehensive
    
    
    TotalCommon Stock
    
    
    Retained
    
    
    Income
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Earnings
    
    
    (Loss)
    
    
    EquityBALANCE, December 31, 2002
    
    
    7,862,380
    
    
    $
    17,841,700
    
    
    $
    32,174,431
    
    
    $
    174,250
    
    
    $
    50,190,381Stock options exercised
    
    
    113,015
    
    
    
    782,637
    
    
    
    
    
    
    
    
    
    
    
    782,637Income tax benefit from stock options
exercised
    
    
    
    
    
    
    212,242
    
    
    
    
    
    
    
    
    
    
    
    212,24210% stock dividend and cash paid for
fractional shares
    
    
    791,887
    
    
    
    12,931,515
    
    
    
    (12,937,194
    )
    
    
    
    
    
    
    (5,679
    )Repurchase of common stock
    
    
    (16,700
    )
    
    
    (247,995
    )
    
    
    
    
    
    
    
    
    
    
    (247,995
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    (2,031,115
    )
    
    
    
    
    
    
    (2,031,115
    )Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    (787,552
    )
    
    
    
    
    
    
    (787,552
    )Net income and comprehensive income
    
    
    
    
    
    
    
    
    
    
    9,833,796
    
    
    
    (142,251
    )
    
    
    9,691,545BALANCE, December 31, 2003
    
    
    8,750,582
    
    
    
    31,520,099
    
    
    
    26,252,366
    
    
    
    31,999
    
    
    
    57,804,464Stock options exercised
    
    
    101,069
    
    
    
    725,193
    
    
    
    
    
    
    
    
    
    
    
    725,193Income tax benefit from stock options
exercised
    
    
    
    
    
    
    121,713
    
    
    
    
    
    
    
    
    
    
    
    121,713Repurchase of common stock
    
    
    (12,500
    )
    
    
    (226,229
    )
    
    
    
    
    
    
    
    
    
    
    (226,229
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    (2,375,043
    )
    
    
    
    
    
    
    (2,375,043
    )Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    (795,524
    )
    
    
    
    
    
    
    (795,524
    )Net income and comprehensive income
    
    
    
    
    
    
    
    
    
    
    10,734,690
    
    
    
    (112,286
    )
    
    
    10,622,404BALANCE, December 31, 2004
    
    
    8,839,151
    
    
    
    32,140,776
    
    
    
    33,816,489
    
    
    
    (80,287
    )
    
    
    65,876,978Stock options exercised
    
    
    115,969
    
    
    
    936,853
    
    
    
    
    
    
    
    
    
    
    
    936,853Income tax benefit from stock options
exercised
    
    
    
    
    
    
    410,137
    
    
    
    
    
    
    
    
    
    
    
    410,137Restricted stock granted
    
    
    16,658
    
    
    
    77,196
    
    
    
    
    
    
    
    
    
    
    
    77,196Repurchase of common stock
    
    
    (6,370
    )
    
    
    (139,878
    )
    
    
    
    
    
    
    
    
    
    
    (139,878
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    (2,409,376
    )
    
    
    
    
    
    
    (2,409,376
    )Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    (887,575
    )
    
    
    
    
    
    
    (887,575
    )Net income and comprehensive income
    
    
    
    
    
    
    
    
    
    
    13,670,162
    
    
    
    (42,007
    )
    
    
    13,628,155BALANCE, December 31, 2005
    
    
    8,965,408
    
    
    $
    33,425,084
    
    
    $
    44,189,700
    
    
    $
    (122,294
    )
    
    $
    77,492,490
  Columbia Bancorp - 50




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    13,670,162
    
    
    $
    10,734,690
    
    
    $
    9,833,796Adjustments to reconcile net income to net cash from
operating activities:Amortization of premiums and discounts on investment securities
    
    
    45,676
    
    
    
    52,682
    
    
    
    16,113Net loss (gain) on sale or call of investment securities
    
    
    1,421
    
    
    
    6,823
    
    
    
    (462,249
    )Gain on sale of mortgage servicing asset
    
    
    (560,588
    )
    
    
    
    
    
    
    Federal Home Loan Bank stock dividend
    
    
    (9,900
    )
    
    
    (69,800
    )
    
    
    (144,900
    )Loss (gain) on sale or write-down of property, equipment,
and other real estate owned
    
    
    34,308
    
    
    
    (560,650
    )
    
    
    118,196Depreciation and amortization:Property, equipment, and other
    
    
    1,728,331
    
    
    
    1,551,223
    
    
    
    1,351,158Mortgage servicing asset
    
    
    116,972
    
    
    
    1,621,091
    
    
    
    2,000,050Stock based compensation expense
    
    
    77,196
    
    
    
    
    
    
    
    Impairment of mortgage servicing asset
    
    
    
    
    
    
    
    
    
    
    858,000Deferred income tax benefit
    
    
    (1,861,826
    )
    
    
    (1,322,155
    )
    
    
    (528,158
    )Provision for loan losses
    
    
    3,115,000
    
    
    
    2,760,000
    
    
    
    2,575,000Increase (decrease) in cash due to changes in certain assets
and liabilities:Proceeds from the sale of mortgage loans held-for-sale
    
    
    81,388,318
    
    
    
    42,608,162
    
    
    
    236,753,057Production of mortgage loans held-for-sale
    
    
    (84,750,456
    )
    
    
    (42,332,960
    )
    
    
    (230,775,664
    )Accrued interest receivable
    
    
    (1,507,292
    )
    
    
    (338,279
    )
    
    
    125,710Mortgage servicing asset
    
    
    
    
    
    
    (92,296
    )
    
    
    (1,935,108
    )Other assets
    
    
    700,076
    
    
    
    (1,178,026
    )
    
    
    (781,711
    )Accrued interest payable and other liabilities
    
    
    2,418,890
    
    
    
    1,035,612
    
    
    
    237,202Net cash from operating activities
    
    
    14,606,288
    
    
    
    14,476,117
    
    
    
    19,240,492CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of available-for-sale securities
    
    
    100,000
    
    
    
    4,500,000
    
    
    
    5,670,252Proceeds from the maturity of available-for-sale securities
    
    
    9,000,000
    
    
    
    8,100,000
    
    
    
    19,030,000Purchases of available-for-sale securities
    
    
    (1,936,264
    )
    
    
    (23,508,519
    )
    
    
    (23,533,877
    )Proceeds from the maturity or call of held-to-maturity securities
    
    
    3,624,719
    
    
    
    1,340,143
    
    
    
    4,954,467Purchases of held-to-maturity securities
    
    
    (2,414,220
    )
    
    
    (4,180,255
    )
    
    
    (1,347,865
    )Purchases of equity securities
    
    
    
    
    
    
    (601,250
    )
    
    
    Net change from the sale of restricted equity securities
    
    
    
    
    
    
    483,700
    
    
    
    Net change in loans made to customers
    
    
    (103,398,240
    )
    
    
    (114,346,355
    )
    
    
    (40,319,910
    )Investment in low-income housing tax credits
    
    
    (109,750
    )
    
    
    (76,750
    )
    
    
    Investment in state tax credits
    
    
    (190,815
    )
    
    
    
    
    
    
    Investment in bank-owned life insurance
    
    
    
    
    
    
    (2,000,000
    )
    
    
    Proceeds from the sale of mortgage servicing asset
    
    
    2,606,270
    
    
    
    
    
    
    
    Proceeds from the sale of property and equipment
    
    
    770,222
    
    
    
    1,519,486
    
    
    
    Proceeds from the sale of other real estate owned
    
    
    188,896
    
    
    
    1,531,330
    
    
    
    63,174Payments made for purchase of property and equipment
    
    
    (3,009,489
    )
    
    
    (3,952,582
    )
    
    
    (1,042,699
    )Net cash from investing activities
    
    
    (94,768,671
    )
    
    
    (131,191,052
    )
    
    
    (36,526,458
    )CASH FLOWS FROM FINANCING ACTIVITIESNet change in demand deposit and savings accounts
    
    
    120,060,627
    
    
    
    45,977,256
    
    
    
    26,498,587Net change in time certificates
    
    
    (19,182,030
    )
    
    
    64,608,267
    
    
    
    11,235,449Net increase (decrease) in notes payable
    
    
    10,801,387
    
    
    
    12,906,099
    
    
    
    (5,151,481
    )Dividends paid and cash paid for fractional shares
    
    
    (3,204,900
    )
    
    
    (3,163,045
    )
    
    
    (2,666,573
    )Proceeds from the exercise of stock options
    
    
    936,853
    
    
    
    725,193
    
    
    
    782,637Repurchase of common stock
    
    
    (139,878
    )
    
    
    (226,229
    )
    
    
    (247,995
    )Net cash from financing activities
    
    
    109,272,059
    
    
    
    120,827,541
    
    
    
    30,450,624NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    29,109,676
    
    
    
    4,112,606
    
    
    
    13,164,658CASH AND CASH EQUIVALENTS, beginning of year
    
    
    57,978,799
    
    
    
    53,866,193
    
    
    
    40,701,535CASH AND CASH EQUIVALENTS, end of year
    
    $
    87,088,475
    
    
    $
    57,978,799
    
    
    $
    53,866,193SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONInterest paid in cash
    
    $
    11,490,935
    
    
    $
    8,277,852
    
    
    $
    6,728,204Taxes paid in cash
    
    $
    9,326,000
    
    
    $
    6,744,000
    
    
    $
    6,027,000SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIESChange in unrealized gain or loss on available-for-sale
securities, net of taxes
    
    $
    (142,828
    )
    
    $
    (104,590
    )
    
    $
    (122,030
    )Change in fair value of interest-rate swap
    
    $
    159,023
    
    
    $
    (7,696
    )
    
    $
    (20,221
    )Cash dividend declared and payable after year-end
    
    $
    887,575
    
    
    $
    795,524
    
    
    $
    787,552Transfers of loans to other real estate owned
    
    $
    84,453
    
    
    $
    1,536,270
    
    
    $
    104,700
  51 - Columbia Bancorp




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##### Table of Contents



NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization and nature of operations
    Managements estimates and assumptions
 Cash and cash equivalents
 Investment securities
 Securities held-to-maturity
 Securities available-for-sale
 Columbia Bancorp




---



##### Table of Contents



Restricted equity securities
 Loans held-for-sale
 Loans, net of allowance for loan losses and unearned loan fees
     Property and equipment 1 2
 Columbia Bancorp




---



##### Table of Contents



Goodwill
 Mortgage servicing asset, net of amortization and valuation allowance
  Investment in a limited partnership
 Other real estate owned
 Income taxes
 Advertising
 Columbia Bancorp




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##### Table of Contents



Earnings per share
 Stock options
 (dollars in thousands except per share data)
    
    2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    13,670
    
    
    $
    10,735
    
    
    $
    9,834Deduct: Total stock-based employee
compensation expense determined
under fair value based methods for
all awards, net of related tax effects
    
    
    (508
    )
    
    
    (82
    )
    
    
    (177
    )$
    13,162
    
    
    $
    10,653
    
    
    $
    9,657Pro forma net incomeEarnings per share (1):Basic  as reported
    
    $
    1.39
    
    
    $
    1.11
    
    
    $
    1.03Basic  pro forma
    
    
    1.34
    
    
    
    1.10
    
    
    
    1.01Diluted  as reported
    
    
    1.36
    
    
    
    1.08
    
    
    
    0.99Diluted  pro forma
    
    
    1.31
    
    
    
    1.07
    
    
    
    0.97
 
 (1)
    
    Prior periods have been adjusted to reflect the 10% stock dividend, effective December 29, 2005  2005
    
    2004
    
    2003Dividend yield
    
    1.82%
    
    1.80%
    
    2.14%Expected life (years)
    
    6 years
    
    6-8 years
    
    6 yearsExpected volatility
    
    40.84%
    
    43.28%
    
    43.71%Risk-free rate
    
    2.05-3.91%
    
    2.90-3.02%
    
    3.02%
  Columbia Bancorp




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##### Table of Contents



Off-balance-sheet financial instruments
  Derivative financial instruments
    Fair value of financial instruments
 Held-to-maturity, available-for-sale, equity securities and restricted equity securities
 Loans receivable
 Deposit liabilities
 Columbia Bancorp




---



##### Table of Contents



Short-term borrowings
 Long-term debt
 Off-balance-sheet instruments
 Recently issued accounting standards
    Reclassifications
 Columbia Bancorp




---



##### Table of Contents



NOTE 2 INVESTMENT SECURITIES
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2005:Debt securities available-for-sale:Obligations of U.S.
government agencies
    
    $
    17,015,660
    
    
    $
    
    
    
    $
    (335,571
    )
    
    $
    16,680,089Municipal securities
    
    
    540,424
    
    
    
    12,547
    
    
    
    
    
    
    
    552,971$
    17,556,084
    
    
    $
    12,547
    
    
    $
    (335,571
    )
    
    $
    17,233,060Equity securities available-for-sale
    
    $
    596,007
    
    
    $
    15,141
    
    
    $
    
    
    
    $
    611,148Debt securities held-to-maturity:Mortgage-backed
securities
    
    $
    4,362,876
    
    
    $
    19,221
    
    
    $
    (50,289
    )
    
    $
    4,331,808Municipal securities
    
    
    12,053,639
    
    
    
    303,450
    
    
    
    (20,492
    )
    
    
    12,336,597Obligations of U.S.
government agencies
    
    
    80,616
    
    
    
    
    
    
    
    
    
    
    
    80,616$
    16,497,131
    
    
    $
    322,671
    
    
    $
    (70,781
    )
    
    $
    16,749,021
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2004:Debt securities available-for-sale:Obligations of U.S.
government agencies
    
    $
    24,045,449
    
    
    $
    
    
    
    $
    (146,327
    )
    
    $
    23,899,122Municipal securities
    
    
    639,617
    
    
    
    34,655
    
    
    
    
    
    
    
    674,272$
    24,685,066
    
    
    $
    34,655
    
    
    $
    (146,327
    )
    
    $
    24,573,394Equity securities available-for-sale
    
    $
    576,524
    
    
    $
    29,070
    
    
    $
    
    
    
    $
    605,594Debt securities held-to-maturity:Mortgage-backed
securities
    
    $
    5,174,079
    
    
    $
    39,089
    
    
    $
    (28,664
    )
    
    $
    5,184,504Municipal securities
    
    
    12,534,465
    
    
    
    596,234
    
    
    
    (936
    )
    
    
    13,129,763Obligations of U.S.
government agencies
    
    
    80,937
    
    
    
    
    
    
    
    
    
    
    
    80,937$
    17,789,481
    
    
    $
    635,323
    
    
    $
    (29,600
    )
    
    $
    18,395,204
 Columbia Bancorp




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##### Table of Contents



Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesObligations of U.S.
government agencies
    
    $
    3,267,457
    
    
    $
    (69,658
    )
    
    $
    13,493,075
    
    
    $
    (265,913
    )
    
    $
    16,760,532
    
    
    $
    (335,571
    )Mortgage-backed securities
    
    
    3,371,180
    
    
    
    (37,920
    )
    
    
    502,350
    
    
    
    (12,369
    )
    
    
    3,873,530
    
    
    
    (50,289
    )Municipal securities
    
    
    1,061,675
    
    
    
    (20,022
    )
    
    
    129,806
    
    
    
    (470
    )
    
    
    1,191,481
    
    
    
    (20,492
    )$
    7,700,312
    
    
    $
    (127,600
    )
    
    $
    14,125,231
    
    
    $
    (278,752
    )
    
    $
    21,825,543
    
    
    $
    (406,352
    )
      Columbia Bancorp




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##### Table of Contents



Available-for-Sale
    
    
    Held-to-MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    6,185,196
    
    
    $
    6,111,065
    
    
    $
    3,332,255
    
    
    $
    3,319,850Due after one year through
five years
    
    
    11,370,888
    
    
    
    11,121,995
    
    
    
    4,324,684
    
    
    
    4,352,444Due after five years through
ten years
    
    
    
    
    
    
    
    
    
    
    8,384,338
    
    
    
    8,632,515Due after ten years
    
    
    
    
    
    
    
    
    
    
    455,854
    
    
    
    444,21217,556,084
    
    
    
    17,233,060
    
    
    
    16,497,131
    
    
    
    16,749,021Equity securities
    
    
    596,007
    
    
    
    611,148
    
    
    
    
    
    
    
    $
    18,152,091
    
    
    $
    17,844,208
    
    
    $
    16,497,131
    
    
    $
    16,749,021
   NOTE 3 RESTRICTED EQUITY SECURITIES
  2005
    
    
    2004Federal Home Loan Bank of Seattle stock
    
    $
    2,429,700
    
    
    $
    2,419,800Federal Agriculture Mortgage Corporation stock
    
    
    9,400
    
    
    
    9,400$
    2,439,100
    
    
    $
    2,429,200
 Columbia Bancorp




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##### Table of Contents



NOTE 4 LOANS AND ALLOWANCE FOR LOAN LOSSES
  2005
    
    
    2004Commercial
    
    $
    101,261,156
    
    
    $
    93,618,385Agriculture
    
    
    84,270,798
    
    
    
    79,223,710Real estate
    
    
    291,283,166
    
    
    
    247,045,236Real estate  construction
    
    
    184,331,410
    
    
    
    139,414,655Consumer
    
    
    13,775,366
    
    
    
    14,385,879Credit card and other loans
    
    
    7,922,886
    
    
    
    7,660,273682,844,782
    
    
    
    581,348,138Less allowance for loan losses
    
    
    (9,525,524
    )
    
    
    (8,184,488
    )Less unearned loan fees
    
    
    (1,512,621
    )
    
    
    (1,555,800
    )Loans, net of allowance for loan losses
and unearned loan fees
    
    $
    671,806,637
    
    
    $
    571,607,850
   2005
    
    
    2004
    
    
    2003BALANCE, beginning of year
    
    $
    8,184,488
    
    
    $
    6,612,308
    
    
    $
    6,416,691Provision for loan losses
    
    
    3,115,000
    
    
    
    2,760,000
    
    
    
    2,575,000Loans charged off
    
    
    (1,963,225
    )
    
    
    (1,291,479
    )
    
    
    (2,533,521
    )Loan recoveries
    
    
    189,261
    
    
    
    103,659
    
    
    
    154,138BALANCE, end of year
    
    $
    9,525,524
    
    
    $
    8,184,488
    
    
    $
    6,612,308
 Columbia Bancorp




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##### Table of Contents



NOTE 5 PROPERTY AND EQUIPMENT
  2005
    
    
    2004Land
    
    $
    3,640,628
    
    
    $
    4,365,164Construction in progress
    
    
    1,654,607
    
    
    
    346,307Buildings and improvements
    
    
    11,021,381
    
    
    
    10,740,303Furniture and equipment
    
    
    8,982,632
    
    
    
    7,856,658Total property and equipment
    
    
    25,299,248
    
    
    
    23,308,432Less accumulated depreciation
    
    
    (9,515,739
    )
    
    
    (8,085,810
    )Property and equipment, net of
accumulated depreciation
    
    $
    15,783,509
    
    
    $
    15,222,622
  2006
    
    $
    143,0002007
    
    
    133,0002008
    
    
    131,0002009
    
    
    95,0002010
    
    
    28,000Total
    
    $
    530,000
 NOTE 6 MORTGAGE SERVICING AND LENDING ACTIVITIES
   Columbia Bancorp




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##### Table of Contents



2005
    
    
    2004
    
    
    2003MSA balance, beginning of year
    
    $
    2,162,654
    
    
    $
    3,691,449
    
    
    $
    4,614,391Additions for capitalized servicing
right premiums
    
    
    
    
    
    
    92,296
    
    
    
    1,935,108Amortization of MSA
    
    
    (116,972
    )
    
    
    (1,621,091
    )
    
    
    (2,000,050
    )Valuation allowance adjustments
    
    
    
    
    
    
    
    
    
    
    (858,000
    )Sale of MSA
    
    
    (2,045,682
    )
    
    
    
    
    
    
    $
    
    
    
    $
    2,162,654
    
    
    $
    3,691,449
  2005
    
    
    2004
    
    
    2003Mortgage loan origination and
processing fee income
    
    $
    1,522,243
    
    
    $
    927,545
    
    
    $
    2,337,879Loan servicing fees
    
    
    288,755
    
    
    
    995,357
    
    
    
    1,193,393Net mortgage servicing expense
    
    
    (116,972
    )
    
    
    (1,528,796
    )
    
    
    (924,092
    )Gain (loss) on loan sales
    
    
    83,786
    
    
    
    195,516
    
    
    
    (288,909
    )Servicing release premium
    
    
    968,759
    
    
    
    531,924
    
    
    
    253,607Hedge expense
    
    
    
    
    
    
    
    
    
    
    (140,206
    )CRB Mortgage Team net revenues
    
    $
    2,746,571
    
    
    $
    1,121,546
    
    
    $
    2,431,672
 NOTE 7 TIME CERTIFICATES
   Years ending December 31,
    
    
    2006
    
    
    $
    107,017,5052007
    
    
    
    28,236,3492008
    
    
    
    7,648,5062009
    
    
    
    18,299,4512010
    
    
    
    6,696,615Thereafter
    
    
    275,635$
    168,174,061
 Columbia Bancorp




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##### Table of Contents



NOTE 8 LINES OF CREDIT AND BORROWED FUNDS
    December 31, 2005
    
    
    December 31, 2004Weighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Maturity
    
    
    Average
    
    
    
    
    
    
    Maturity
    
    
    AverageAmount
    
    
    Year
    
    
    Interest Rate
    
    
    Amount
    
    
    Year
    
    
    Interest Rate$
    
    
    23,000,000
    
    
    
    2006
    
    
    
    4.25
    %
    
    $
    6,750,000
    
    
    
    2005
    
    
    
    2.84
    %11,500,000
    
    
    
    2007
    
    
    
    4.43
    %
    
    
    3,000,000
    
    
    
    2006
    
    
    
    3.12
    %7,719,957
    
    
    
    2008
    
    
    
    3.28
    %
    
    
    11,500,000
    
    
    
    2007
    
    
    
    3.91
    %1,951,613
    
    
    
    2009
    
    
    
    2.81
    %
    
    
    9,509,958
    
    
    
    2008
    
    
    
    3.30
    %669,381
    
    
    
    2013
    
    
    
    5.47
    %
    
    
    728,023
    
    
    
    2013
    
    
    
    5.47
    %$
    
    
    44,840,951
    
    
    
    
    
    
    
    4.09
    %
    
    $
    31,487,981
    
    
    
    
    
    
    
    3.41
    %
  NOTE 9 JUNIOR SUBORDINATED DEBENTURES
   Columbia Bancorp




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##### Table of Contents



NOTE 10 INTEREST-RATE SWAP
   Columbia Bancorp




---



##### Table of Contents



NOTE 11 INCOME TAXES
  2005
    
    
    2004
    
    
    2003Current tax expense:Federal
    
    $
    8,489,103
    
    
    $
    6,467,478
    
    
    $
    5,077,462State
    
    
    901,554
    
    
    
    1,080,338
    
    
    
    1,015,0059,390,657
    
    
    
    7,547,816
    
    
    
    6,092,467Deferred tax (benefit) expense:Federal
    
    
    (1,567,853
    )
    
    
    (1,182,981
    )
    
    
    (479,137
    )State
    
    
    (293,973
    )
    
    
    (139,174
    )
    
    
    (49,021
    )(1,861,826
    )
    
    
    (1,322,155
    )
    
    
    (528,158
    )Provision for income taxes
    
    $
    7,528,831
    
    
    $
    6,225,661
    
    
    $
    5,564,309
  2005
    
    
    2004
    
    
    2003Mortgage servicing rights
    
    $
    (821,808
    )
    
    $
    (580,943
    )
    
    $
    (350,718
    )Loan loss provision not deductible
for tax
    
    
    (599,520
    )
    
    
    (664,872
    )
    
    
    (141,778
    )Difference between book and tax
depreciation methods
    
    
    (213,406
    )
    
    
    (578
    )
    
    
    (117,890
    )Deferred compensation
    
    
    (96,654
    )
    
    
    (128,991
    )
    
    
    (53,472
    )Difference between book and tax
recognition of Federal Home
Loan Bank stock dividends
    
    
    1,474
    
    
    
    26,615
    
    
    
    54,957Cash surrender value greater than
investment in life insurance policies
    
    
    
    
    
    
    (156,770
    )
    
    
    55,186Other differences
    
    
    (131,912
    )
    
    
    183,384
    
    
    
    25,557Deferred income tax benefit
    
    $
    (1,861,826
    )
    
    $
    (1,322,155
    )
    
    $
    (528,158
    )
 Columbia Bancorp




---



##### Table of Contents



2005
    
    
    2004Deferred tax assets:Allowance for loan losses
    
    $
    3,619,699
    
    
    $
    3,020,179Purchased state tax credits
    
    
    385,320
    
    
    
    315,121Deferred compensation
    
    
    423,846
    
    
    
    327,192Unrealized losses on investment securities
    
    
    112,685
    
    
    
    31,0004,541,550
    
    
    
    3,693,492Deferred tax liabilities:Accumulated depreciation
    
    
    (745,863
    )
    
    
    (959,269
    )Mortgage servicing rights
    
    
    
    
    
    
    (821,808
    )Federal Home Loan Bank stock dividends
    
    
    (349,600
    )
    
    
    (348,126
    )Unrealized gains on interest rate swap
    
    
    (42,086
    )
    
    
    Other
    
    
    (72,033
    )
    
    
    (133,746
    )(1,209,582
    )
    
    
    (2,262,949
    )Net deferred tax asset
    
    $
    3,331,968
    
    
    $
    1,430,543
   Federal income taxes at statutory rate
    
    $
    7,419,648
    
    
    
    35.00
    %
    
    $
    5,766,520
    
    
    
    34.00
    %
    
    $
    5,234,876
    
    
    
    34.00
    %State income tax expense, net of
federal income tax benefit
    
    
    529,228
    
    
    
    2.50
    
    
    
    713,023
    
    
    
    4.20
    
    
    
    534,522
    
    
    
    3.47Effect of nontaxable interest income
    
    
    (195,991
    )
    
    
    (0.92
    )
    
    
    (200,083
    )
    
    
    (1.18
    )
    
    
    (236,035
    )
    
    
    (1.53
    )Increase in cash surrender value of
life insurance policies
    
    
    (85,008
    )
    
    
    (0.40
    )
    
    
    (23,796
    )
    
    
    (0.14
    )
    
    
    
    
    
    
    Other
    
    
    (139,046
    )
    
    
    (0.66
    )
    
    
    (30,002
    )
    
    
    (0.18
    )
    
    
    30,946
    
    
    
    0.20Provision for income taxes
    
    $
    7,528,831
    
    
    
    35.52
    %
    
    $
    6,225,661
    
    
    
    36.70
    %
    
    $
    5,564,309
    
    
    
    36.14
    %
 Columbia Bancorp




---



##### Table of Contents



NOTE 12 EARNINGS PER SHARE
  2005
    
    
    2004
    
    
    2003Basic earnings per share:Income available to common shareholders
    
    $
    13,670,162
    
    
    $
    10,734,690
    
    
    $
    9,833,796Weighted-average common shares
outstanding
    
    
    9,802,876
    
    
    
    9,674,662
    
    
    
    9,588,229Basic earnings per share
    
    $
    1.39
    
    
    $
    1.11
    
    
    $
    1.03Diluted earnings per share:Income available to common shareholders
    
    $
    13,670,162
    
    
    $
    10,734,690
    
    
    $
    9,833,796Weighted-average common shares
outstanding
    
    
    9,802,876
    
    
    
    9,674,662
    
    
    
    9,588,229Net effect of dilutive stock options  based
on the treasury stock method using
average market price
    
    
    243,888
    
    
    
    272,072
    
    
    
    305,689Weighted-average common shares
outstanding and common stock
equivalents
    
    
    10,046,764
    
    
    
    9,946,734
    
    
    
    9,893,918Diluted earnings per share
    
    $
    1.36
    
    
    $
    1.08
    
    
    $
    0.99
  NOTE 13 STOCK OPTION PLAN
  Columbia Bancorp




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##### Table of Contents



Weighted-
    
    
    Weighted-Non-
    
    
    Average
    
    
    AverageTotal
    
    
    Incentive
    
    
    statutory
    
    
    Exercise
    
    
    FairOptions
    
    
    Options
    
    
    Options
    
    
    Price
    
    
    ValueOptions under grant  December 31, 2002
    
    
    777,969
    
    
    
    664,934
    
    
    
    113,035
    
    
    $
    7.46Options granted in 2003:Incentive stock options
    
    
    33,475
    
    
    
    33,475
    
    
    
    
    
    
    $
    12.40
    
    
    $
    4.59Nonstatutory stock options
    
    
    28,784
    
    
    
    
    
    
    
    28,784
    
    
    $
    14.72
    
    
    $
    5.47Options exercised in 2003:Incentive stock options
    
    
    (107,890
    )
    
    
    (107,890
    )
    
    
    
    
    
    $
    5.79Nonstatutory stock options
    
    
    (22,983
    )
    
    
    
    
    
    
    (22,983
    )
    
    $
    6.87Options expired or forfeited in 2003
    
    
    (6,589
    )
    
    
    (6,589
    )
    
    
    
    
    
    $
    11.74Options under grant  December 31, 2003
    
    
    702,766
    
    
    
    583,930
    
    
    
    118,836
    
    
    $
    8.24Options granted in 2004:Incentive stock options
    
    
    37,400
    
    
    
    37,400
    
    
    
    
    
    
    $
    15.91
    
    
    $
    6.05Options exercised in 2004:Incentive stock options
    
    
    (106,549
    )
    
    
    (106,549
    )
    
    
    
    
    
    $
    6.50Nonstatutory stock options
    
    
    (4,627
    )
    
    
    
    
    
    
    (4,627
    )
    
    $
    4.55Options expired or forfeited in 2004
    
    
    (243
    )
    
    
    (243
    )
    
    
    
    
    
    $
    12.32Options under grant  December 31, 2004
    
    
    628,747
    
    
    
    514,538
    
    
    
    114,209
    
    
    $
    8.99Options granted in 2005:Incentive stock options
    
    
    76,913
    
    
    
    76,913
    
    
    
    
    
    
    $
    17.57
    
    
    $
    6.31Nonstatutory stock options
    
    
    38,394
    
    
    
    
    
    
    
    38,394
    
    
    $
    19.63
    
    
    $
    7.38Options exercised in 2005:Incentive stock options
    
    
    (83,637
    )
    
    
    (83,637
    )
    
    
    
    
    
    $
    7.57Nonstatutory stock options
    
    
    (43,929
    )
    
    
    
    
    
    
    (43,929
    )
    
    $
    6.92Options expired or forfeited in 2005
    
    
    (1,206
    )
    
    
    (1,206
    )
    
    
    
    
    
    $
    15.61Options under grant  December 31, 2005
    
    
    615,282
    
    
    
    506,608
    
    
    
    108,674
    
    
    $
    11.05Options reserved  December 31, 2005
    
    
    361,977
 Columbia Bancorp




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##### Table of Contents



Incentive Stock Options
    
    Nonstatutory Stock OptionsNumber
    
    Average
    
    
    
    
    
    Number
    
    AverageNumber
    
    of Options
    
    Remaining
    
    
    
    
    
    of Options
    
    RemainingExercise
    
    of Options
    
    Outstanding
    
    Contractual Life
    
    Exercise
    
    Outstanding
    
    Contractual LifePrice
    
    Outstanding
    
    and Exercisable
    
    (in years)
    
    Price
    
    and Exercisable
    
    (in years)$
    4.62
    
    
    
    16,510
    
    
    
    16,510
    
    
    
    1.6
    
    
    $
    5.68
    
    
    
    1,254
    
    
    
    4.0$
    9.50
    
    
    
    2,420
    
    
    
    2,420
    
    
    
    2.3
    
    
    $
    5.99
    
    
    
    3,388
    
    
    
    5.1$
    6.61
    
    
    
    1,210
    
    
    
    1,210
    
    
    
    3.4
    
    
    $
    8.15
    
    
    
    41,407
    
    
    
    6.0$
    6.41
    
    
    
    2,420
    
    
    
    2,420
    
    
    
    3.4
    
    
    $
    9.68
    
    
    
    6,776
    
    
    
    6.6$
    5.68
    
    
    
    44,818
    
    
    
    44,818
    
    
    
    4.0
    
    
    $
    12.40
    
    
    
    4,034
    
    
    
    7.0$
    5.99
    
    
    
    78,771
    
    
    
    78,771
    
    
    
    5.1
    
    
    $
    15.10
    
    
    
    16,500
    
    
    
    7.9$
    8.15
    
    
    
    102,818
    
    
    
    102,818
    
    
    
    6.0
    
    
    $
    16.44
    
    
    
    2,612
    
    
    
    9.1$
    9.17
    
    
    
    2,030
    
    
    
    2,030
    
    
    
    6.2
    
    
    $
    19.86
    
    
    
    32,703
    
    
    
    9.9$
    9.42
    
    
    
    1,980
    
    
    
    1,980
    
    
    
    6.3$
    12.32
    
    
    
    109,528
    
    
    
    109,528
    
    
    
    7.0$
    12.40
    
    
    
    29,845
    
    
    
    29,845
    
    
    
    7.0$
    12.52
    
    
    
    2,420
    
    
    
    2,420
    
    
    
    7.2$
    15.85
    
    
    
    33,000
    
    
    
    13,200
    
    
    
    8.0$
    16.31
    
    
    
    2,200
    
    
    
    2,200
    
    
    
    8.0$
    16.36
    
    
    
    2,200
    
    
    
    880
    
    
    
    8.2$
    16.44
    
    
    
    48,401
    
    
    
    48,401
    
    
    
    9.1$
    18.43
    
    
    
    1,100
    
    
    
    1,100
    
    
    
    9.6$
    19.86
    
    
    
    24,937
    
    
    
    24,937
    
    
    
    9.9506,608
    
    
    
    485,488
    
    
    
    
    
    
    
    
    
    
    
    108,674
  NOTE 14 EMPLOYEE BENEFIT PLANS AND AGREEMENTS
   2005
    
    
    2004Allocated shares, retroactively adjusted
for stock dividends and splits
    
    
    291,605
    
    
    
    331,089Cash on hand
    
    $
    35,275
    
    
    $
    25,695
 Columbia Bancorp




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##### Table of Contents



Columbia Bancorp




---



##### Table of Contents



NOTE 15 TRANSACTIONS WITH RELATED PARTIES
  2005
    
    
    2004BALANCE, beginning of year
    
    $
    13,375,735
    
    
    $
    10,352,164Adjustment for loans of retired Director
who is no longer a related party
    
    
    (5,573,571
    )
    
    
    Loans made
    
    
    3,814,039
    
    
    
    6,911,685Loans repaid
    
    
    (3,930,513
    )
    
    
    (3,888,114
    )BALANCE, end of year
    
    $
    7,685,690
    
    
    $
    13,375,735
  NOTE 16 CONCENTRATIONS OF CREDIT RISK
   NOTE 17 FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
    Columbia Bancorp 




---



##### Table of Contents



Contract AmountsDecember 31,2005
    
    
    2004Financial instruments whose contract amounts
contain credit risk:Commitments to extend credit
    
    $
    200,916,446
    
    
    $
    168,812,079Undisbursed credit card lines of credit
    
    
    19,581,692
    
    
    
    18,437,055Commercial and standby letters of credit
    
    
    2,308,877
    
    
    
    2,226,916$
    222,807,015
    
    
    $
    189,476,050
   NOTE 18 RISK MANAGEMENT ACTIVITIES
   Columbia Bancorp




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##### Table of Contents



NOTE 19 COMMITMENTS AND CONTINGENCIES
 Operating lease commitments
 Years ending December 31,
    
    2006
    
    $
    855,6002007
    
    
    829,3002008
    
    
    839,6002009
    
    
    821,2002010
    
    
    790,800Thereafter
    
    
    5,528,600$
    9,665,100
  Purchase / construction commitments
 Legal contingencies
 Columbia Bancorp 




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##### Table of Contents



NOTE 20 PARENT COMPANY FINANCIAL INFORMATION
  December 31,2005
    
    
    2004ASSETSCash
    
    $
    1,433,977
    
    
    $
    620,598Investment security available-for-sale
    
    
    96,000
    
    
    
    101,250Investment security held-to-maturity
    
    
    80,616
    
    
    
    80,937Investment in subsidiary Bank
    
    
    78,666,976
    
    
    
    68,542,717Deferred tax asset
    
    
    865,705
    
    
    
    471,683Interest rate swap
    
    
    114,990
    
    
    
    Other assets
    
    
    2,036,908
    
    
    
    1,527,721TOTAL ASSETS
    
    $
    83,295,172
    
    
    $
    71,344,906LIABILITIESJunior Subordinated Debentures
    
    $
    4,124,000
    
    
    $
    4,124,000Interest rate swap liability
    
    
    
    
    
    
    44,033Dividend payable
    
    
    887,575
    
    
    
    795,524Deferred compensation plan liability
    
    
    268,395
    
    
    
    206,163Employee benefits
    
    
    309,721
    
    
    
    113,865Interest and other payables
    
    
    212,991
    
    
    
    184,343Total liabilities
    
    
    5,802,682
    
    
    
    5,467,928SHAREHOLDERS EQUITYCommon stock
    
    
    33,425,084
    
    
    
    32,140,776Retained earnings
    
    
    44,189,700
    
    
    
    33,816,489Accumulated comprehensive income, net of tax
    
    
    (122,294
    )
    
    
    (80,287
    )Total shareholders equity
    
    
    77,492,490
    
    
    
    65,876,978TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY
    
    $
    83,295,172
    
    
    $
    71,344,906
 Columbia Bancorp




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003REVENUESEquity in undistributed earnings of subsidiary
    
    $
    10,263,758
    
    
    $
    8,319,064
    
    
    $
    7,213,593Dividends
    
    
    4,611,000
    
    
    
    3,300,000
    
    
    
    2,909,603Other
    
    
    27,324
    
    
    
    6,580
    
    
    
    449,502EXPENSESAdministrative and other expenses
    
    
    (1,231,920
    )
    
    
    (890,954
    )
    
    
    (738,902
    )Net income
    
    $
    13,670,162
    
    
    $
    10,734,690
    
    
    $
    9,833,796Years Ended December 31,2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    13,670,162
    
    
    $
    10,734,690
    
    
    $
    9,833,796Adjustments to reconcile net income to net cash from
operating activities:Equity in undistributed earnings of subsidiaries
    
    
    (10,263,758
    )
    
    
    (8,319,064
    )
    
    
    (7,213,593
    )Gain on sale of corporate equity securities
    
    
    
    
    
    
    
    
    
    
    (457,265
    )Loss on sale or write-down of land
    
    
    
    
    
    
    5,429
    
    
    
    23,067Changes in other assets and liabilities
    
    
    (262,296
    )
    
    
    (221,979
    )
    
    
    (394,822
    )Net cash from operating activities
    
    
    3,144,108
    
    
    
    2,199,076
    
    
    
    1,791,183CASH FLOWS FROM INVESTING ACTIVITIESPurchase of corporate equity securities
    
    
    
    
    
    
    
    
    
    
    (75,000
    )Proceeds from sale of corporate equity securities
    
    
    
    
    
    
    
    
    
    
    570,252Proceeds from sale of property and equipment
    
    
    
    
    
    
    102,381
    
    
    
    Payments made for purchase of property and equipment
    
    
    
    
    
    
    (35,540
    )
    
    
    Net cash from investing activities
    
    
    
    
    
    
    66,841
    
    
    
    495,252CASH FLOWS FROM FINANCING ACTIVITIESDividends paid and cash paid for fractional shares
    
    
    (3,204,900
    )
    
    
    (3,162,595
    )
    
    
    (2,666,573
    )Repurchase of common stock
    
    
    (139,878
    )
    
    
    (226,229
    )
    
    
    (247,995
    )Proceeds from the exercise of stock options
    
    
    1,014,049
    
    
    
    725,193
    
    
    
    782,637Net cash from financing activities
    
    
    (2,330,729
    )
    
    
    (2,663,631
    )
    
    
    (2,131,931
    )NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    813,379
    
    
    
    (397,714
    )
    
    
    154,504CASH AND CASH EQUIVALENTS, beginning of year
    
    
    620,598
    
    
    
    1,018,312
    
    
    
    863,808CASH AND CASH EQUIVALENTS, end of year
    
    $
    1,433,977
    
    
    $
    620,598
    
    
    $
    1,018,312SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIESChange in unrealized loss or gain on available-for-sale,
net of tax
    
    $
    (142,828
    )
    
    $
    (104,590
    )
    
    $
    (122,030
    )Change in fair value of interest-rate swap, net of tax
    
    $
    159,023
    
    
    $
    (7,696
    )
    
    $
    (20,221
    )Cash dividend payable
    
    $
    887,575
    
    
    $
    795,524
    
    
    $
    787,552
 Columbia Bancorp 




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##### Table of Contents



NOTE 21 REGULATORY MATTERS
    To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2005(dollars in thousands)Total capital to risk-weighted assets:Columbia Bancorp
    
    $
    83,837
    
    
    
    11.0
    %
    
    $
    61,264
    
    
    
    38
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    81,011
    
    
    
    10.6
    %
    
    $
    60,990
    
    
    
    38
    %
    
    $
    76,237
    
    
    
    310
    %Tier 1 capital to risk-weighted assets:Columbia Bancorp
    
    $
    74,312
    
    
    
    9.7
    %
    
    $
    30,632
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    71,486
    
    
    
    9.4
    %
    
    $
    30,495
    
    
    
    34
    %
    
    $
    45,742
    
    
    
    36
    %Tier 1 capital to average assets:Columbia Bancorp
    
    $
    74,312
    
    
    
    9.8
    %
    
    $
    30,432
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    71,486
    
    
    
    8.9
    %
    
    $
    32,076
    
    
    
    34
    %
    
    $
    40,095
    
    
    
    35
    %
 To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2004(dollars in thousands)Total capital to risk-weighted assets:Columbia Bancorp
    
    $
    70,270
    
    
    
    11.1
    %
    
    $
    50,885
    
    
    
    38
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    68,935
    
    
    
    10.9
    %
    
    $
    50,723
    
    
    
    38
    %
    
    $
    63,404
    
    
    
    310
    %Tier 1 capital to risk-weighted assets:Columbia Bancorp
    
    $
    62,341
    
    
    
    9.8
    %
    
    $
    25,442
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    61,006
    
    
    
    9.6
    %
    
    $
    25,362
    
    
    
    34
    %
    
    $
    38,042
    
    
    
    36
    %Tier 1 capital to average assets:Columbia Bancorp
    
    $
    62,341
    
    
    
    8.7
    %
    
    $
    28,537
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    61,006
    
    
    
    8.6
    %
    
    $
    28,507
    
    
    
    34
    %
    
    $
    35,634
    
    
    
    35
    %
 Columbia Bancorp




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##### Table of Contents



NOTE 22 FAIR VALUES OF FINANCIAL INSTRUMENTS
  2005
    
    2004Estimated
    
    
    
    
    
    EstimatedCarrying
    
    Fair
    
    Carrying
    
    Fair(dollars in thousands)
    
    Amount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and due from banks
    
    $
    34,632
    
    
    $
    34,632
    
    
    $
    25,527
    
    
    $
    25,527Interest-bearing deposits with banks
    
    
    23,175
    
    
    
    23,175
    
    
    
    12,166
    
    
    
    12,166Federal funds sold
    
    
    29,282
    
    
    
    29,282
    
    
    
    20,286
    
    
    
    20,286Investment securities available-for-sale
    
    
    17,233
    
    
    
    17,233
    
    
    
    24,573
    
    
    
    24,573Investment securities held-to-maturity
    
    
    
    
    
    
    16,749
    
    
    
    17,789
    
    
    
    18,395Equity securities
    
    
    
    
    
    
    
    
    
    
    606
    
    
    
    606Restricted equity securities
    
    
    2,439
    
    
    
    2,439
    
    
    
    2,429
    
    
    
    2,429Loans held-for-sale
    
    
    5,879
    
    
    
    5,879
    
    
    
    2,517
    
    
    
    2,517Loans, net of allowance for loan losses
and unearned loan fees
    
    
    671,807
    
    
    
    655,210
    
    
    
    571,608
    
    
    
    569,270Mortgage servicing asset
    
    
    
    
    
    
    
    
    
    
    2,163
    
    
    
    2,163Financial liabilities:Demand and savings deposits
    
    $
    539,648
    
    
    $
    539,648
    
    
    $
    419,587
    
    
    $
    419,587Time certificates
    
    
    168,174
    
    
    
    167,025
    
    
    
    187,356
    
    
    
    189,130Notes payable
    
    
    45,691
    
    
    
    45,353
    
    
    
    34,890
    
    
    
    34,952Junior Subordinated Deferrable
Interest Debentures
    
    
    4,124
    
    
    
    4,124
    
    
    
    4,124
    
    
    
    4,124
   Columbia Bancorp 




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on the Internal Control Over Financial Reporting
   
    
    Address the maintenance of reasonably detailed records and data that accurately and
fairly reflect the transactions and dispositions of Columbias assets;
    
    Provide reasonable assurance that transactions are recorded as necessary to allow the
preparation of financial statements in accordance
with GAAP and that our receipts and expenditures are being made with proper authorizations
of Columbias management and directors; and
    
    Provide reasonable assurance regarding the timely prevention or detection of
unauthorized transactions, acquisitions, expenditures or the use or disposition of
Columbias assets that could have a material effect on the consolidated financial
statements.
    Columbia Bancorp




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   Directors:
 
 Executive Officers:
  Roger L. Christensen (48).  R. Shane Correa (40).  James C. McCall (60).  Craig J. Ortega (49).  Greg B. Spear (40).  Britt W. Thomas (46).
 Code of Ethics
  
 Columbia Bancorp 




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##### Table of Contents



Audit Committee
  
 ITEM 11. EXECUTIVE COMPENSATION AND REPORT OF COMPENSATION COMMITTEE
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
   (i)
    
    Independent Auditors Report(ii)
    
    Consolidated Balance Sheets for the Years Ended December 31, 2005 and 2004(iii)
    
    Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31,
2005, 2004, and 2003(iv)
    
    Consolidated Statements of Changes in Shareholders Equity for the Years Ended December 31,
2005, 2004, and 2003(v)
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003(vi)
    
    Notes to Consolidated Financial Statements
  Columbia Bancorp




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##### Table of Contents



3.1.1
    
    
    Articles of Incorporation of Columbia Bancorp (Incorporated herein by reference to
Exhibit 3(i) to Columbias form 10-Q for the period ended June 30, 1999.)3.1.2
    
    
    Bylaws of Columbia Bancorp (Incorporated herein by reference to Exhibit 15.5 to
Columbias Form 10-KSB for the year ended December 31, 1998.)4.1
    
    
    Indenture dated as of December 19, 2002 between Columbia Bancorp, as Issuer, and Wells Fargo
Bank, N.A., as Trustee, relating to Floating Rate Junior Subordinated Debt Securities due 2033
(Incorporated herein by reference to Exhibit 4.1 to Columbias form 10-K for the period ended
December 31, 2004.)4.2
    
    
    Form of Floating Rate Junior subordinated Debt Security due 2033 (Incorporated herein by
reference to Exhibit A as contained in Exhibit 4.1 to Columbias form 10-K for the period
ended December 31, 2004.)10.1+
    
    
    Employment Agreement between Roger L. Christensen and Columbia Bancorp dated April 15, 2005.
(Incorporated herein by reference to Exhibit 10.1 to Columbias quarterly report on Form 10-Q
for the period ended June 30, 2005.)10.2+
    
    
    Employment Agreement between James C. McCall and Columbia River Bank dated August 3, 2005.
(Incorporated herein by reference to Exhibit 10.1 to Columbias quarterly report on Form 10-Q
for the period ended September 30, 2005.)10.3+
    
    
    Employment Agreement between Craig J. Ortega and Columbia River Bank dated April 15, 2005.
(Incorporated herein by reference to Exhibit 10.3 to Columbias quarterly report on Form 10-Q
for the period ended June 30, 2005.)10.4+
    
    
    Employment Agreement between Britt W. Thomas and Columbia River Bank dated April 15, 2005.
(Incorporated herein by reference to Exhibit 10.4 to Columbias quarterly report on Form 10-Q
for the period ended June 30, 2005.)10.5+
    
    
    Deferred Compensation Agreement of April 1, 1999 between Terry L. Cochran and Columbia
Bancorp. (Incorporated herein by reference to Exhibit 10.2 to Columbias Annual Report on Form
10-K for the year ended December 31, 1999.)10.6+
    
    
    Columbia Bancorp Restated Employee Stock Ownership Plan and Trust Agreement (1999
Restatement). (Incorporated herein by reference to Exhibit 10.2 to Columbias Annual Report on
Form 10-K for the year ended December 31, 1999.)10.7+
    
    
    Executive Salary Continuation Agreement between Columbia River Bank and Roger L.
Christensen. (Incorporated herein by reference to Exhibit 10.2 to Columbias Periodic Report
on Form 10-Q for the period ended September 30, 2002.)10.8+
    
    
    Executive Bonus Deferral Agreement between Columbia River Bank and Roger L. Christensen.
(Incorporated herein by reference to Exhibit 10.2 to Columbias Periodic Report on Form 10-Q
for the period ended September 30, 2002.)10.9+
    
    
    Split Dollar Agreement between Columbia River Bank and Roger L. Christensen. (Incorporated
herein by reference to Exhibit 10.3 to Columbias Periodic Report on Form 10-Q for the period
ended September 20, 2002.)10.10+
    
    
    Phantom Stock Agreement between Columbia Bancorp and Roger L. Christensen. (Incorporated
herein by reference to Exhibit 10.4 to Columbias Periodic Report on Form 10-Q for the period
ended September 30, 2002.)10.11+
    
    
    Executive Salary Continuation Agreement between Columbia River Bank and James C. McCall.
(Incorporated herein by reference to Exhibit 10.11 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.12+
    
    
    Executive Bonus Deferral Agreement between Columbia River Bank and James C. McCall.
(Incorporated herein by reference to Exhibit 10.12 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.13+
    
    
    Split Dollar Agreement between Columbia River Bank and James C. McCall. (Incorporated herein
by reference to Exhibit 10.13 to Columbias Annual Report on Form 10-K for the period ended
December 31, 2002.)
 Columbia Bancorp 




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##### Table of Contents



10.14+
    
    
    Executive Salary Continuation Agreement between Columbia River Bank and Craig J. Ortega.
(Incorporated herein by reference to Exhibit 10.14 to Columbias Annual Report on Form 10-K for the
period ended December 31, 2002.)10.15+
    
    
    Executive Bonus Deferral Agreement between Columbia River Bank and Craig J. Ortega.
(Incorporated herein by reference to Exhibit 10.15 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.16+
    
    
    Split Dollar Agreement between Columbia River Bank and Craig J.
Ortega. (Incorporated herein by reference to Exhibit 10.16 to Columbias Annual
Report on Form 10-K for the period ended December 31, 2002.)10.17+
    
    
    Executive Salary Continuation Agreement between Columbia River Bank and Britt W. Thomas.
(Incorporated herein by reference to Exhibit 10.17 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.18+
    
    
    Executive Bonus Deferral Agreement between Columbia River Bank and Britt W. Thomas.
(Incorporated herein by reference to Exhibit 10.18 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.19+
    
    
    Split Dollar Agreement between Columbia River Bank and Britt W. Thomas. (Incorporated herein
by reference to Exhibit 10.19 to Columbias Annual Report on Form 10-K for the period ended
December 31, 2002.)10.20+
    
    
    Executive Salary Continuation Agreement between Columbia River Bank and Greg B. Spear.
(Incorporated herein by reference to Exhibit 10.20 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.21+
    
    
    Executive Bonus Deferral Agreement between Columbia River Bank and Greg B. Spear.
(Incorporated herein by reference to Exhibit 10.21 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2002.)10.22+
    
    
    Split Dollar Agreement between Columbia River Bank and Greg B. Spear. (Incorporated herein
by reference to Exhibit 10.22 to Columbias Annual Report on Form 10-K for the period ended
December 31, 2002.)10.23+
    
    
    Employment Agreement between R. Shane Correa and Columbia River Bank dated May 15, 2005.
(Incorporated herein by reference to Exhibit 10.5 to Columbias quarterly report on Form 10-Q
for the period ended June 30, 2005.)10.24+
    
    
    Employment Agreement between Greg B. Spear and Columbia Bancorp dated April 15, 2005.
(Incorporated herein by reference to Exhibit 10.2 to Columbias quarterly report on Form 10-Q
for the period ended June 30, 2005.)10.25+
    
    
    Columbia Bancorp 1999 Stock Incentive Plan (Amended 2002) (Incorporated herein by reference
to Exhibit 4.2 to Columbias
report S-8 Securities to be offered to employees in employee benefit plans filed
January 28, 2005.)10.26+
    
    
    Executive Salary Continuation Agreement between Columbia River Bank and R. Shane Correa.
(Incorporated herein by reference to Exhibit 10.20 to Columbias Annual Report on Form 10-K
for the period ended December 31, 2004.)10.27+
    
    
    Split Dollar Agreement between Columbia River Bank and R. Shane Correa. (Incorporated herein
by reference to Exhibit 10.1 to Columbias quarterly report on Form 10-Q for the period ended
March 31, 2005.)10.28+
    
    
    Executive Bonus Deferral Agreement between Columbia River Bank and R. Shane Correa.*13.1
    
    
    Annual Report to Shareholders for the Year Ended December 31, 2005.*21.1
    
    
    List of Subsidiary.*23.1
    
    
    Consent of Moss Adams, LLP.*
 Columbia Bancorp




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##### Table of Contents



31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-4(a).*31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).*32.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) and
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.*32.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) and
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.*
 
 +
    
    Management contract, compensation plan or arrangement.*
    
    Included as an exhibit to Columbia Bancorps Form 10-K for the year ended December 31, 2005 filed
with the Securities and Exchange Commission. 
 SIGNATURES
  COLUMBIA BANCORP
 DATED:
    
    March 13, 2006
    
    By: Roger L. Christensen, President & C.E.O  Columbia and CRB
  PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR
 DATED:
    
    March 13, 2006
    
    By: Roger L. Christensen, President & C.E.O  Columbia and CRB
 CHIEF FINANCIAL OFFICER
 DATED:
    
    March 13, 2006
    
    By:
    
    Greg B. Spear, Chief Financial Officer andExecutive Vice-President  Columbia and CRB
 DIRECTORS:DATED:
    
    March 13, 2006
    
    By: Richard E. Betz, Director and ChairmanDATED:
    
    March 13, 2006
    
    By: Charles F. Beardsley, DirectorDATED:
    
    March 13, 2006
    
    By: William A. Booth, DirectorDATED:
    
    March 13, 2006
    
    By: Lori R. Boyd, DirectorDATED:
    
    March 13, 2006
    
    By: Dennis L. Carver, DirectorDATED:
    
    March 13, 2006
    
    By: Terry L. Cochran, DirectorDATED:
    
    March 13, 2006
    
    By: James J. Doran, DirectorDATED:
    
    March 13, 2006
    
    By: Jean S. McKinney, DirectorDATED:
    
    March 13, 2006
    
    By: Donald T. Mitchell, Director and Chairman
 Columbia
Bancorp 